Frustration and confusion are ongoing themes for bond markets at the moment. The most visible antagonist in that regard is the "weather effect," whereby a harsher than average winter may or may not be affecting economic metrics enough to render them meaningless for the purpose of guiding market movement. It doesn't ultimately matter how much of an effect the weather is having. All that matters is that markets aren't sure about that and must wait for "something" before that changes.
Unlike last week, we'll see a few "somethings" this week. It's not much, but several of this week's events will be able to transcend the data in various ways, potentially delivering some much-needed trading motivation in the process.
The first standout event arrives on Tuesday with the Consumer Confidence numbers at 10am. Whereas factories and businesses may have been shut-down by the weather, the inability to get a latte at your favorite coffee shop doesn't make you, as a consumer, any less confident. This data won't be immune from potential weather effects (obviously, if the coffee shop employees who got paid less this month were surveyed, they might be less confident!), but it should figure less prominently than in the data sets more closely tied to "business activity."
There will be another similar report on Friday with Consumer Sentiment, but there is plenty to hold our interest in the meantime. The calendar is jam-packed with Fed speakers and Yellen finally gets her day with the Senate Banking Committee (previously postponed due to weather) on Thursday. The Fed's stance doesn't seem to be too mysterious at the moment, but questions (and comments) could come up regarding the mention of earlier possible rate hikes in last week's minutes. Sane people can only assume that most Fed members will say "yeah, I don't agree with that. It's just, like, one or two dudes, and one dudette. The rest of us think that's pretty stupid."
While the Fed speakers won't use those exact words (sad really... it would be more interesting), the message might not be far off, and it could prove to be comforting in some small way, at least as a reiteration of something we're all pretty sure we already know.
Last and least, there's the rest of the economic data. The only standard-issue report that isn't susceptible to "weather issues" is Friday's GDP (as it covers the Oct-Dec). On the other hand, December was one of those "top 10 coldest/snowiest" months in the midwest and northeast, so GDP isn't totally immune. The other issue is that it's GDP--3 month old data in a marketplace that's less concerned with '3 months ago,' and more interest in 'next month' when we'll hopefully get to see how the economy is operating without any weather-related disturbances.
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