Are we or are we not headed toward a global economic contraction in mid-to-late 2019?  Or are such things on hold for another year or two?  Inquiring traders want to know.  They'd been trading as if a contraction was a more imminent threat from November 2018 through late March 2019, but have been having second thoughts since then.

Beyond the domestic economy, we have to keep an eye on Europe and China at the moment.  Apart from simply being a good policy in general (it's a global economy, after all), paying attention to EU/China makes sense considering the Fed has explicitly said it's doing the same.  Point being that any noticeable bounce in economic data in those two regions could lead the Fed to err on the side of less friendly monetary policy.

We'll have to wait until next Wednesday to get the next official policy announcement from the Fed.  Perhaps we'll notice some shift in tone given the obvious improvements in Chinese economic data and a few arguments for stability in the European economic deceleration.   Between now and then, the current week only offers a few events to inform the outlook.  

Monday is the slowest among these with Existing Home Sales being the only notable inclusion.  Things pick up on Tuesday with New Home Sales and Eurozone consumer confidence. Tuesday also marks the starts of the 3-day Treasury auction cycle.  Wednesday's data is limited to Germany's IFO business climate survey, but things pick up on Thursday with Durable Goods data in the US.  Finally, we'll get the first reading of US Q1 GDP on Friday morning followed by consumer sentiment at 10am.  

From a technical standpoint, momentum indicators have finally reached levels that are consistent with "bounce potential."  In other words, rates have risen enough that they might fall.  Such an approach is far from perfect when it comes to predicting the future, however.  We'd still need to see 10yr yields break convincingly below 2.55% in order to feel a bit more optimistic about additional strength.  Even then, any such strength likely continues to depend on the tone of incoming economic data at home and abroad.

2019-4-22 open


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
100-20 : -0-04
Treasuries
10 YR
2.5790 : +0.0210
Pricing as of 4/22/19 9:46AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Apr 22
10:00 Existing home sales (ml)* Mar 5.30 5.51
10:00 Exist. home sales % chg (%)* Mar -3.8 11.8
Tuesday, Apr 23
9:00 Monthly Home Price mm (%) Feb 0.6
10:00 New home sales-units mm (ml)* Mar 0.650 0.667
10:00 New home sales chg mm (%)* Mar -2.5 4.9
13:00 2-Yr Note Auction (bl) 40
Wednesday, Apr 24
7:00 Mortgage Refinance Index w/e 1453.0
7:00 MBA Purchase Index w/e 280.7
13:00 5-Yr Note Auction (bl)* 41
Thursday, Apr 25
8:30 Nondefense ex-air (%)* Mar 0.1 -0.1
8:30 Durable goods (%)* Mar 0.8 -1.6
8:30 Continued jobless claims (ml) w/e 1.699 1.653
8:30 Jobless Claims (k) w/e 200 192
13:00 7-Yr Note Auction (bl)* 32
Friday, Apr 26
8:30 GDP Advance (%)* Q1 2.0 3.4
10:00 Consumer Inflation Expectations (1yr) (%) Apr 2.4
10:00 Consumer Sentiment (ip) Apr 97.0 96.9
10:00 Consumer Inflation Expectations (5yr) (%) Apr 2.3