Treasuries extended their rally into the overnight session and opened this morning around a basis point lower, with the 10-year hitting its lowest level since January 8th, 2018. In its meeting yesterday, the Federal Open Market Committee voted unanimously to leave the target range unchanged at 2.25% to 2.50%. The committee reiterated language from the January meeting, stating that the central bank will remain patient due to “global economic and financial developments and muted inflation pressures.” The committee also projects zero rate hikes this year, down from two. They also revised their expectation for 2019 GDP lower to 2.1% from 2.3% and lowered the 2020 outlook to 1.9% from 2.0%. The market reacted strongly to this news of no further rate hikes, with stocks moving briefly into positive territory and the Treasury curve shifting 8 to 10 basis points lower.
In addition to its economic projections, the Fed also shone light on its plan for balance sheet normalization; stating that the central bank would begin to taper the pace of the unwinding in May, by lowering the reinvestment cap on Treasuries from $30 billion to $15 billion, and stop the runoff completely in September. Additionally, as expected, the Fed announced that they would roll the runoff from its MBS portfolio into Treasury securities starting in October. Initially this reallocation will be capped at $20 billion a month and will be invested in Treasury maturities that will “roughly match the maturity of composition of Treasury securities outstanding”. The Fed also mentioned that would consider “limited sales of agency MBS” to help shape the long-run make up of its balance sheet but mentioned that the “timing and pace of any sales would be communicated to the public well in advance.”
Hafizan HamzahDirector, Investment Management Group
| Date Time | Event | Survey | Actual | Prior | Revised | |
| 3/18/2019 | NAHB Housing Market Index | Mar | 63 | 62 | 62 | — |
| 3/19/2019 | Factory Orders | Jan | 0.30% | 0.10% | 0.10% | — |
| 3/19/2019 | Factory Orders Ex Trans | Jan | — | -0.20% | -0.60% | -0.50% |
| 3/19/2019 | Durable Goods Orders | Jan F | 0.40% | 0.30% | 0.40% | — |
| 3/19/2019 | Durables Ex Transportation | Jan F | -0.10% | -0.20% | -0.10% | — |
| 3/19/2019 | Cap Goods Orders Nondef Ex Air | Jan F | 0.80% | 0.80% | 0.80% | — |
| 3/19/2019 | Cap Goods Ship Nondef Ex Air | Jan F | — | 0.80% | 0.80% | — |
| 3/20/2019 | MBA Mortgage Applications | 15-Mar | — | 1.60% | 2.30% | — |
| 3/20/2019 | FOMC Rate Decision (Upper Bound) | 20-Mar | 2.50% | 2.50% | 2.50% | — |
| 3/20/2019 | FOMC Rate Decision (Lower Bound) | 20-Mar | 2.25% | 2.25% | 2.25% | — |
| 3/20/2019 | Interest Rate on Excess Reserves | 21-Mar | 2.40% | 2.40% | 2.40% | — |
| 3/21/2019 | Philadelphia Fed Business Outlook | Mar | 4.8 | 13.7 | -4.1 | — |
| 3/21/2019 | Initial Jobless Claims | 16-Mar | 225k | 221k | 229k | 230k |
| 3/21/2019 | Continuing Claims | 9-Mar | 1770k | 1750k | 1776k | 1777k |
| 3/21/2019 | Bloomberg Consumer Comfort | 17-Mar | — | 61.5 | 60.8 | — |
| 3/21/2019 | Bloomberg Economic Expectations | Mar | — | 47.5 | 54.5 | — |
| 3/21/2019 | Leading Index | Feb | 0.10% | — | -0.10% | 0.00% |
| 3/22/2019 | Markit US Manufacturing PMI | Mar P | 53.4 | — | 53 | — |
| 3/22/2019 | Markit US Services PMI | Mar P | 55.5 | — | 56 | — |
| 3/22/2019 | Markit US Composite PMI | Mar P | — | — | 55.5 | — |
| 3/22/2019 | Wholesale Inventories MoM | Jan | 0.10% | — | 1.10% | — |
| 3/22/2019 | Wholesale Trade Sales MoM | Jan | — | — | -1.00% | — |
| 3/22/2019 | Existing Home Sales | Feb | 5.10m | — | 4.94m | — |
| 3/22/2019 | Existing Home Sales MoM | Feb | 3.20% | — | -1.20% | — |
| 3/22/2019 | Monthly Budget Statement | Feb | -$227.0b | — | -$215.2b | — |