The Day Ahead: Economic Data Glut and Last of the Treasury Auctions


To be clear, today’s 30yr Bond Auction isn’t officially the “last of the Treasury auctions,” but it will be the last one this week.  On those occasions, we sometimes see bond markets react more in terms of price/yield movement than the auction performance might seem to suggest.  This can happen due to the relatively simple notion that the week’s supply needs are out of the way and no more heavy lifting will be required until after next week’s FOMC events.  The auction is at 1pm, but there’s a ton of data before that, most of it at 8:30am.

The most significant item on the morning calendar is likely May Retail Sales, seen coming in at +0.4 after last month’s +0.1.  Dips below  0 are rare in the past few years, so if wehappened to see one, it would help our cause.  on the upside, a break above 0.4 has been rare since late 2012, but the one example was a big one.  

Even on a big beat or miss, we’re likely dealing with course corrections to pre-existing trading strategies heading into next week’s events.  A revisit to 2.07 between now and then is just as possible as 2.31, but at the risk of stating the obvious, this trend continues to be bearish.  If it hopes to NOT be bearish, we’d like to see a break of 2.17.

Apart from Retail Sales, Jobless Claims and Import/Export prices also occupy the 8:30 slot.  Prices are a relative non-event, and Claims are hit and miss, generally not doing much when they fall inside the late 2012 / early 2013 trend seen below.  They’re expected to come in at 345k vs 346k previously.  Business Inventories is the morning’s last report at 10am, but not a major market mover.

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