Data Void
This week seems pretty quiet on the economic front in the US, with minimal macroeconomic data releases except for the University of Michigan sentiment index. It'll be interesting to see if there's any indication of further decline in consumer confidence.
The mood among Americans appears to be cautious and divided, a sentiment echoed by both the Michigan and Conference Board surveys. This uncertainty is unlikely to dissipate before the upcoming election.
Traders will likely keep an eye on the refunding auctions, considering that yields have retreated from year-to-date highs. While these auctions represent substantial supply events, it's worth noting that the Quarterly Refunding Announcement confirmed no coupon increases for the rest of 2024. Additionally, the Treasury buyback program, coinciding with the Federal Reserve's tapering of Quantitative Tightening (QT), presents a supportive technical environment.
Despite the large volume of bonds being sold by the US, the technical backdrop seems favorable. However, it's wise not to discount the possibility of concessions during this week's auctions. And for those expecting "failed" auctions, it might be best not to hold their breath.
As for Federal Reserve speakers, there's a long list scheduled for the coming days. While the frequency of communication from Fed officials might seem excessive, it's become a part of the market reality, even if it's sometimes seen as counterproductive.