Last week we had Retail Sales data come out on Tuesday, where we saw the continued theme of soft economic numbers. The headline figure was .01%, which was lower than expected but still a significant improvement from the month prior (-.02%). June has been fairly quiet thus far on the trading front, but this week should be busier with the end of Q2 looming. There wasn’t much significant rate movement last week. 2-year and 10-year Swaps are both roughly 50 BPS off their recent highs. For any clients with hedging needs, it remains a good time to take advantage of the inverted curve.
This week we have a few Treasury auctions to watch. $69 Billion of 2-year securities will be auctioned Tuesday, followed by $70 Billion of 5-year paper and $44 Billion of 7’s on Thursday. Generally, 2’s and 5’s are expected to perform well but not 7’s. The auctions typically don’t move markets much unless they’re received very poorly. The big economic data point to watch this week will be PCE, which is expected to remain flat MoM. Personal Spending data will follow on Friday. The market is still pricing in 2 rate cuts at this point, which remains a bit more aggressive than what we’re hearing from the Fed.
