US Credit Mkt Wk Ahd: Heavy Fed Speak Bookend May FOMC Minutes

     WASHINGTON (MNI) - The prior week enjoyed the best trade volumes in weeks

as 10Y note yield climbed to new (near) seven year high of 3.126% in early Asia

trade Thursday, underpinning the strong correlation between US$ and the Japanese

Yen that broke a 200-day moving average earlier in the week, nearly topping

111.0 early Friday.

     Treasury yield curve's climb off 10-plus year lows accelerated Tuesday amid

a deluge of selling, stop-outs and curve unwinds while small-cap equities

managed a rally to new highs on improved sentiment.

     Ironically, while geopolitical tensions abroad remain a constant source of

angst, any sign of relief has provided an excuse for a risk-on move (what

occurred Wednesday when Italian coalition government conceded debt forgiveness

to the EU was not part of the program, allaying nascent concerns over the

dissolution of the EU).

     Domestic data has largely taken a back seat to global headline watching

(NAFTA and other trade negotiations with Europe and China, North Korea summit to

name a few), currency pairs and emerging markets this week and is likely to

continue through next week, at least until Wednesday afternoon's release of the

May FOMC minutes.

     The week kicks off with a trio of Fed speakers answering audience Q&A at

separate events, while economic data doesn't get underway until Tuesday.

     On Monday, Atlanta Federal Reserve Bank President Raphael Bostic will speak

on "Welfare Economics: Trade & A Review of Principles" at the Atlanta Economics

Club in Atlanta at 1215ET.

     Up next, Philadelphia Federal Reserve Bank President Patrick Harker will

speak at the Chief Executives Organization's CEO Financial Seminar 2018 -

Visionary Investing: Managing Late Cycle Risks and Opportunities in New York at

1415ET.

     Minneapolis Federal Reserve Bank President Neel Kashkari will participate

in a Town Hall Forum in Escanaba, Michigan at 1730ET.

     No Fed speakers are scheduled for Tuesday, but a modest flurry of second

tier data is: Philadelphia and Richmond Fed Non-manufacturing Indexes, Redbook

retail sales and Treasury Allotments.

     Data continues to take a back seat Wednesday (MBA Mortgage apps, Markit

Services/Manufacturing Indexes, New home sale, etc) with the main focus on the

May 1-2 FOMC minutes to be released at 1400ET.

     Credit Suisse strategists posits the Fed's "topics of discussion in the

minutes" is likely to remain "centered on forward guidance, inflation

overshooting, and yield curve inversion."

     Deutsche Bank economists expect yield curve flattening to be mentioned in

the minutes. "While some policymakers have expressed concern regarding the

implications of an inverted yield curve," DB said, highlighting "Bostic,

Bullard, Kaplan, Kashkari, others have been more sanguine--most notably Fed

Chair Powell, soon to be New York Fed President Williams and his predecessor

Dudley."

     Incidentally, DB "forecast, the yield curve will likely invert by the end

of 2019."

     The May minutes will also provide further background to the addition of

"symetric" to the Fed's reference of its 2% inflation objective, "signaling that

policymakers will be as tolerant of a temporary rise in inflation above 2% as

they were when inflation moved below 2% last year), RBS NatWest economist said.

     Soon after the minutes release, Minneapolis Federal Reserve Bank President

Neel Kashkari will participate in a Q&A on New Energy Economic Reality in

Bismarck, North Dakota at 1415ET.

     Speaking early Thursday, New York Federal Reserve Bank President William

Dudley will present on "Reference Rate Reform; Improving the Culture of FICC

Markets" at the Markets Forum 2018 in London at 0415ET followed by Philadelphia

Federal Reserve Bank President Patrick Harker at Technology-Enabled Disruption:

Implications for Business, Labor Markets and Monetary Policy in Dallas at

1400ET.

     The week rounds out with another trio of speakers Friday as Chicago Federal

Reserve Bank President Charles Evans, Atlanta Federal Reserve Bank President

Raphael Bostic, and Dallas Federal Reserve Bank President Rob Kaplan will

participate in a panel discussion at the Technology-Enabled Disruption:

Implications for Business, Labor Markets and Monetary Policy in Dallas at

1145ET.

     Friday also includes Durable Goods data (-1.2% est; 0.6% ex trans). Credit

Suisse economists said they expect "headline durable goods orders to fall by

2.5% MoM in April after a 2.6% gain in March. Ex transportation, we expect

orders to rise 0.5% MoM after a mild increase of just 0.1%."

     Monthly Fed reinvestment caps consistent with the FOMC Sept. 20 decision

and June 2017 addendum:

MONTHLY CAPS ON SOMA SECURITIES REDUCTIONS

US TREASURIES.../AGENCY MBS/MONTH CAP 

- Oct-Dec 2017.. $6 billion./$4 billion 

- Jan-Mar 2018.. $12 billion/$8 billion 

- Apr-Jun 2018 $18 billion../$12 billion 

- Jul-Sep 2018 $24 billion../$16 billion 

- From Oct 2018** $30 billion $20 billion

Calendar of next week's market events (prior, estimate): 

- May 21 Atl Fed Pres Bostic, "Welfare Economics: Trade & A Review of

Principles" at the Atlanta Economics Club in Atlanta, Q&A 1215ET

- May 21 Phi Fed Pres Harker CEO Fncl Seminar 2018 - Visionary Investing:

Managing Late Cycle Risks and Opportunities in New York, audience/media Q&A

1415ET

- May 21 Mn Fed Pres Kashkari, Town Hall Forum in Escanaba, Michigan, Q&A 1730ET

- May 22 May Philadelphia Fed Nonmfg Index (27.6, --) 0830ET

- May 22 19-May Redbook retail sales m/m (0.8%, --) 0855ET

- May 22 May Richmond Fed Mfg Index (-3, --) 1000ET

- May 22 May Treasury Allotments (p) 1500ET

- May 23 18-May MBA Mortgage Applications (-2.7%, --) 0700ET

- May 23 May Markit Services Index (flash) (54.6, --) 0945ET

- May 23 May Markit Mfg Index (flash) (56.5, --) 0945ET

- May 23 Apr new home sales (694k, 678k) 1000ET

- May 23 Apr bldg permits revision (1.352m, --) 1000ET

- May 23 Q4 QCEW employment 1000ET

- May 23 18-May crude oil stocks ex. SPR w/w (-1.4m bbl, --) 1030ET

- May 23 FOMC minutes from May 1-2 meeting, 1400ET

- May 23 Mn Fed Pres Kashkari Q&A on New Energy Economic Reality, NDakota, Q&A

1415ET

- May 24 NY Fed Pres Dudley, "Ref Rate Reform/Improving FICC Mkts" London, Q&A

0415ET

- May 24 19-May jobless claims (222k, 217k) 0830ET

- May 24 Mar FHFA Home Price Index (0.6%, --) 0900ET

- May 24 Q1  FHFA Quarterly Home Prices (1.61%, --) 0900ET

- May 24 20-May Bloomberg comfort index 0945ET

- May 24 Apr existing home sales (5.60m, 5.57m) 1000ET

- May 24 18-May natural gas stocks w/w 1030ET

- May 24 May Kansas City Fed Mfg Index (26, --) 1100ET

- May 24 Phi Fed Pres Harker Technology-Enabled Disruption: Implications for

Business, Labor Markets and Monetary Policy in Dallas, Q&A, 1400ET

- May 24 23-May Fed weekly securities holdings 1630ET

- May 25 Apr durable goods new orders (2.6%, -1.2%) 0830ET

- May 25 Apr durable new orders ex transport (0.1%, 0.6%) 0830ET

- May 25 May Michigan sentiment index (f) (98.8, 99.0) 1000ET

- May 25 Q2 St. Louis Fed Real GDP Nowcast 1100ET

- May 25 Q2 NY Fed GDP Nowcast 1115ET

- May 25 Chi Fed Pres Charles Evans, Atl Fed Pres Bostic, and Dal Fed Pres

Kaplan, panel discussion at the Technology-Enabled Disruption: Implications for

Business, Labor Markets and Monetary Policy in Dallas, with audience Q&A. 1145ET

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]