Fixed income market: the week ahead Fixed income market: the week ahead Fixed income market: the week ahead

Fixed income market: the week ahead

Picture of Althea Spinozzi
Althea Spinozzi

Head of Fixed Income Strategy

Summary:  This week's market focus will be on the Federal Reserve's speakers and the FOMC minutes. The market is trying to find clarity over last week's news that the Fed needs to return unused funds to the Treasury. We might hear central bankers pleading for stimulus as the termination of the Fed's facilities will weight considerably on next year's Q1 economic growth. As a consequence, we could see the US yield curve to continue to flatten. In Europe, the ECB monetary policy meeting accounts might shed some light on how the central bank is planning to ease the economy by the end of the year. In the emerging market space, we could see for the first time since the 90's a Venezuelan company to issue US dollar debt.

It is going to be a very different Thanksgiving this year. On one side, we have the market fretting about the rise of Covid-19 cases and a lack of stimulus. On the other side, the market is eagerly looking at a reflation trade and the advent of a vaccine. This is why the FOMC minutes this Wednesday will be crucial to understand where to position for year-end. There are speculations that in order to slow down the rise of long term rates, the Fed is looking to include longer duration bonds in its bond-buying program. However, the market is impatiently waiting for clarification over the Fed's programs that are due to expire by year-end. Treasury’s Mnuchin has asked the Fed to return unused funds and to extend, for 90-days, only four facilities. Fed’s Daly speech today and Williams and Clarida’s speeches tomorrow might shed some light on what is going to happen. Once again, we might hear central bankers to plea congress for stimulus. Suppose a deal on stimulus will not be reached; in that case, unemployment benefits are going to be terminated by year-end, weighting on 2021 Q1 economic outlook.

In terms of government bond auctions, we are seeing the Treasury issuing notes with maturity up to 7-years today and tomorrow. Still, we don't expect any particular interference in those auctions as uncertainty should support demand for Treasuries.

Even though Treasury yields fell last week, dragged by the news of a rise in Covid-19 cases and Mnuchin’s requests to the Fed, the reaction of the corporate bond market was muted on Friday. The CDX Investment Grade index, which gauges the riskiness of the higher-rated corporate bond market, rose slightly by the end of the week. The CDX High Yield spread remained stable. Yet, this week corporate bond issuance is slowing down, but desks are pointing to the fact that it is because of Thanksgiving.

On Thursday we have the ECB’s monetary policy meeting accounts of its October’s meeting. Investors are almost certain that the ECB is planning for additional easing before the end of the year. It will be vital to understand which form of stimulus the ECB is considering. In the past few weeks, many pointed to the fact that the central bank might consider expanding the PEPP program, which will ultimately give a boost to the periphery. We continue to be positive over 30-year BTPs as they trade rich compared to peers and they are better positioned to benefit from additional stimulus.

In the emerging market space, the situation is not bright. Moody’s has cut the rating of South Africa’s foreign- and local- debt from Ba1 to Ba2 as it sees the country’s fiscal standing deteriorating. On the other hand, Guatemala has not paid its missed bond payment yet. The country has entered in a grace period which will end next week, failure to make the payment will result in a default. Zambia has defaulted on $42.5 million sovereign bond payment turning into Africa's first sovereign to default in the pandemic era. This week, we might see the first Venezuelan company to issue US dollar debt since the '90s. Ron Santa Teresa is a rum company and the largest of the country planning to allocate in the market $300,000 in commercial papers.

Economic calendar:

Monday, the 23rd of November

  • Eurozone: Markit PMI numbers, ECB’s Schnabel speech
  • United Kingdom : Markit PMI numbers
  • United States: Markit PMI numbers, Government bond auction for 3- and 6-monht Bills and 2- and 5-year notes, Federal Reserve Daly speech
  • Canada: BOC’s Gravell Speech

Tuesday, the 24th of November

  • Australia: Trade Balance, RBA’s Debelle speech
  • Germany: GDP numbers, IFO Business Climate
  • United Kingdom: BoE’s Haskel speech
  • Japan: BoJ’ Kuroda speech
  • United States: Housing prices, Consumer Confidence, Williams and Clarida from the Federal Reserve speak, 7-year note auction
  • New Zealand: RBNZ’s Governor Orr speaks

Wednesday,  the 25th of November

  • Eurozone: EU Financial Stability review
  • Switzerland: ZEW survey
  • Untied States: Durable Goods Orders, Core Personal Consumption Expenditures, Gross Domestic Product, Initial Jobless Claims, FOMC Minutes
  • United Kingdom: Autumn Forecast Statement

Thursday, the 26th of November

  • United states: Thanksgiving day
  • Eurozone: M3 Money Supply, ECB Monetary Policy Meeting accounts
  • Japan: Tokyo Consumer Price index

Friday, the 27th of November

  • Germany: German BUBA President Weidmann speech
  • Eurozone: Consumer Confidence, Business Climate


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.