Fixed Income Markets: The Week Ahead

Bonds

Althea Spinozzi

Fixed Income Strategist

This week we expect market sentiment to depend on news concerning President Trump's health and progress regarding the fiscal stimulus package. The main questions are: (1) will Trump be able to run the presidential campaign? (2) will the stimulus package be agreed upon or there might be further delays?

Investors will most likely not want to take a strong market position as it is not clear if the President's symptoms will become more severe. On Friday, the CFTC Commitment of Traders showed that traders' short position in bond futures is the biggest ever on record. Ultra and long maturities were the most sold, indicating that the market expects a fast bear steepener. This sentiment can translate in lower participation in this week's 30-year treasury auction.

We have a week rich of federal reserve speeches and government bond auctions where the US government will look to sell 3, 10 and 30 year Treasuries. It will be crucial to monitor whether treasuries demand softens up as bearish sentiment can leak to the corporate bond space hindering the pipeline in the primary market.

In Europe, investors will try to wrap their head around weaker than expected consumer prices which were released last week. If the ECB decides to increase stimulus, we might see sovereigns prices rising fast. The country that will most likely benefit from it, it's Italy as more aid is necessary to fight long term deflation.

5th of October

  • Eurozone: Markit composite PMI; investor confidence; retail sales
  • United Kingdom: official reserves changes; Markit services and composite PMI
  • USA: Services PMI; ISM nonmanufacturing; Chicago Fed President Charles Evans; Atlanta Fed President Raphael Bostic

 6th of October

  • Eurozone: ECB President Lagarde speaks
  •  UK government auction: to sell GBP 2bn of 2049 bonds
  • Germany government auction: to sell EUR 500 mil of 2030 linkers
  • USA: JOLTS; Jerome Powell speaks at National Association for Business Economics
  • USA government auction: to sell USD 52bn 3-year notes

 7th of October

  • Eurozone: ECB President Lagarde speaks in Paris
  • United Kingdom: house price index; unit labor costs; output per hour.
  • UK government auctions: to sell GBP 2.5bm of 2030 bonds; to sell GBP 750mil of 2041 linkers
  • USA: Fed minutes; Consumer Credit. Several Fed’s speaker from Atlanta, New York, Boston, Chigago and Minneapolis.
  • USA government auction: to sell USD 35bn 10-year notes reopening.

 8th of October:

  • USA Initial jobless Claims.
  • USA government auction: to sell USD 23bn of 30-year bonds reopening.

9th of October

  • United Kingdom: GDP figures; industrial production.
  • USA: wholesale trade.
Disclaimer

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 is not intended to and does not change or expand on this. 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 (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)

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

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.