Sunday, February 22, 2015

The Week Ahead: Yellen testimony, GDP, inflation, homes, durable goods

Fed Chair Janet Yellen presents her semiannual reports to Congress, testifying Tuesday before the Senate Banking, Housing and Urban Affairs Committee and Wednesday before the House Financial Services Committee. Both hearings begin at 10 a.m. New York time.

Two economic indicators providing insight into the heart of monetary policy will be published this week: Gross domestic product and the consumer price index.

The second iteration of the 4th quarter GDP will be released on Friday at 8:30 a.m. The first release a month earlier showed an annual rate of 2.6%. Any significant deviation from that level will have an impact on the markets.

The consumer price index, measuring inflation or deflation, will be out on Thursday at 8:30 a.m. The Federal Reserve money policy people tend to give greater credence to a price indicator contained within the GDP report, but the CPI is what produces the headlines and so has political as well as economic significance.

Other potential market movers are existing home sales on Monday and new home sales on Wednesday, each at 10 a.m., and durable goods orders on Thursday at 8:30 a.m.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

Index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 10 a.m. Friday.

Other items of interest:

Monday: The Dallas Federal Reserve manufacturing survey at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price index at 9 a.m. and the Conference Board consumer confidence index at 10 a.m.

Wednesday: Petroleum inventories at 10:30 a.m.

Friday: The Chicago Purchasing Managers index at 9:45 a.m. and pending home sales at 10 a.m.

I also keep an eye on the Baltic Dry Index, updated daily.

Treasury Debt

  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday
  • 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 52-week: Announcement Thursday 11 a.m.
  • 2-year: Auction Tuesday 1 p.m.
  • 2-year floating rate: Auction Wednesday 11:30 a.m.
  • 5-year: Auction Wednesday 1 p.m.
  • 7-year: Auction Thursday 1 p.m.

  • 30-year: Settlement Friday


In addition to Fed Chair Yellen's congressional testimony, Fed Vice Chairman Stanley Fischer will address the U.S. Monetary Policy Forum in New York on Friday at 1:30 p.m. His subject: "Conducting Monetary Policy with a Large Balance Sheet".

Both Yellen and Fischer are members of the Federal Open Market Committee.

Other FOMC members taking to the podium: Atlanta Fed Pres. Dennis Lockhart on Thursday and New York Fed Pres. William Dudley on Friday.

Cleveland Fed Pres. Loretta Mester, an alternate on the FOMC, will also make a public appearance on Friday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,434 stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades, I'm trading March options and later for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading June options and later for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading.
-- Tim Bovee, Portland, Oregon, Feb. 22, 2015


My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


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