|08:30||Phila. Fed mfg survey||Little change from moderately strong August level|
|08:30||Jobless claims||First wave of Iris filings may boost claims this week|
|09:00||FHFA house price index||Small increase expected in July|
|10:00||Leading indicators||Expect a 0.6% rise in August|
|11:00||3- and 6-month bill announcement||Likely steady at current levels|
|11:00||2-, 5-, 7-yr, and 2-yr FRN (r) note announcement||No changes expected|
|13:00||10-yr TIPS (r) auction||$11 billion offering|
Initial jobless claims may move above 300K in this week’s report, reflecting the first batch of Irma-related filings as well as additional claims arising from Hurricane Harvey. The Philadelphia Fed factory data may be roughly unchanged from last month’s moderately strong level, while the FHFA house price index could struggle to extend its long string of monthly increases in the July report.
Chair Yellen yesterday gave the market no reason to believe that the FOMC had lost confidence in its view that a third 2017 rate hike would be appropriate by December. We had thought that the Fed would be more reluctant to dismiss the recent softness in the inflation data, but the tone of yesterday’s press conference suggests that the bar for a December rate hike is not particularly high.
Today’s bill announcements: 3- & 6-month bills
Today’s coupon announcements: 2-, 5- & 7-year notes; 2-year FRN reopening
Today’s coupon auction: 10-year TIPS reopening
It is a foregone conclusion that the Fed will leave rates on hold but announce the beginning of its balance sheet runoff at this week’s FOMC meeting. The big question is how the Fed will frame the debate over the possibility of a third rate hike in December. We assume that Chair Yellen will want to keep her options open at this point. As long as the Fed does nothing to take a rate hike off the table this week, the market in the near term may continue to bump up the implied odds of another move by year-end.