Treasury Market Awaits Fed Decision

Treasury Market Awaits Fed Decision

Action Economics: The markets will remain preoccupied debating tomorrow's FOMC decision, especially as today's calendar is light with only pending home sales and the Treasury's announcement of 10-year notes (reopening). Although there are many possible outcomes from the Fed, we believe the best guess is for a moderate 25 bp easing in the funds target, and a more aggressive 50 bp reduction in the Discount rate.

As for today's data, we look for a little rebound in the pending home sales index to 86.0 in October from 85.7. The debt managers are likely to announce a $8 bln 10-year note reopening, down from the $13 bln at November's refunding. Data later in the week includes PPI, CPI, retail sales, and industrial production. All are important, but will play second fiddle to the Fed's decision.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE