Treasury Action: the auctions are out of the way and ended on a solid note
Treasury Action: the auctions are out of the way and ended on a solid note. Trade issues will remain a focal point, but the encouraging signs from the Mexico deal, and the potential agreement with Canada, along with the better than expected Q2 GDP result, and strong earnings, should keep investor optimism high. Meanwhile, bond yields remain generally capped for now. A 25 bp Fed hike is priced in for September, while some uncertainties over China's trade situation and signs of slowing growth, as well as ongoing difficulties in Turkey and Italy, could limit extending short positions in Treasuries. The advent of the long Labor Day weekend is likely to limit bond trading over the rest of the week. There's key data tomorrow on income, consumption, and the PCE deflator, but the report isn't likely to alter perceptions of solid growth and still relatively tame price pressures. The jobs report is out a week from Friday, and recent data point to ongoing tight conditions. The 10-year rate hasn't closed at the 2.90% mark since August 9, and hasn't seen a 3.0% handle since August 1.