Last week, the majority of new data indicated a softening economy. The 10-year Treasury yield finished down 7 BPS on the week, but it has risen a bit today following a sell off. PCE numbers captured headlines last week, but we also saw softer durable goods and consumer confidence numbers. PCE figures were elevated, and monthly PCE was higher MoM (.4%).
Last week’s TSY auctions went smoothly. The 2-year, 5-year, and 7-year auctions were all received relatively well, and there’s nothing out of the norm to report.
Last week’s focus was on inflationary data, but this week the focus will be on jobs. We have JOLTS on Wednesday and monthly payroll numbers to watch on Friday. The market is expecting a softening of these figures, as January numbers were elevated. Powell is also giving his congressional testimony this week, which could impact markets.
The 1-month SOFR rate remains at 5.32. Nothing seems to be priced into the SOFR markets with regards to this month’s Fed meeting. There are still 3.5 cuts being priced in for the remainder of 2024, but the Fed is expected to hold steady for the time being.
CMBS delinquency rates were up to 4.71% in February, compared to 3.12% a year ago. This is something to monitor because if the trend continues, spreads and average CMBS coupons for new deals are likely to rise as well.
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