By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- The focus in the markets will turn back to the Fed and inflation with the resolution of the debt-ceiling negotiations. The economic calendar is light with the ISM services index the highlight. The service side of the economy has remained relatively resilient despite the weakness in manufacturing and the index is expected to confirm that with a reading of 52.4 (anything greater than 50 indicates expansion).
- The Treasury auction calendar will be busy as the government refills it coffers. On Monday, Treasury is scheduled to sell almost $175 billion in Treasury bills with additional auctions throughout the week.
- The Fed enters its blackout period prior to next week’s FOMC meeting (June 13-14) and this will be the rare week with no Fed speakers on the topics of the economy and monetary policy. Futures are currently pricing in no change to monetary policy at next week’s meeting.
Three Things to Know
- To help manage cash flow around the debt-ceiling agreement, last week the Treasury issued one- and three-day Treasury bills yielding 5.15% and 6.15%, respectively. (Source: Investopdia)
- June 6 marks the 79th anniversary of the invasion of Normandy, the largest seaborne invasion in history. It featured nearly 5,000 landing and assault craft, 289 escort vessels, and 277 minesweepers participating. Nearly 160,000 troops crossed the English Channel on D-Day. Thousands of paratroopers landed first but only 15% of them landed in the right place. (Source: Kiddle)
- As part of the debt-ceiling agreement, federal student loan forbearance (in effect for approximately 31/2years) will end effective Sept. The federal government has confirmed at least 27 million borrowers representing $1.1 trillion in forbearance. The average loan tenure is 10 years, which equates to about $9 billion to $10 billion per month in a headwind to capacity to spend. There are more borrowers than the 27 million not paying on their loans, but the data is opaque and there is estimated another 13 million representing approximately $400 billion in forbearance. (Source: @NeelyTamminga)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.