US Credit Mkt Wk Ahd: Spring Forward Into Fed Media Blackout

     CHICAGO (MNI) - March 10 started the media blackout period for the Federal

Reserve ahead the long-form FOMC policy announcement on March 20-21 (speaker

blackout ends Thursday, March 22).

     There is a flurry of economic data in the week ahead with focus debatably

on Wednesday's February Retail Sales.

     Scotiabank economists posit the retail sales data "will be relying upon

more difficult to observe momentum in core sales (ex-autos and gas) to drive any

gains."

     Markets are already aware that "vehicle sales were little changed (-0.6%

m/m) and regular unleaded gasoline prices were up by only about 1% m/m,

Scotiabank said, "therefore, headline sales that include autos and gasoline

won't get any significantly greater lift than whatever happens to core sales."

     The potential for a "weaker weather effect" could boost core sales,

Scotiabank added. "Recall that the weakest spending categories in January were

ones that are most likely to be influenced by weather and included visiting auto

dealerships, heading out to eating/drinking establishments and loading up on

building materials. A weather effect conundrum, however, is the fact that

February was warmer than the average month of February - but also wetter across

the population-dense Eastern and Midwest states."

     Karl Haeling, VP of capital markets at Landesbank Baden-Wurttemberg (LBBW)

said the consensus forecasts retail sales are for "+0.3% m/m on total sales and

+0.4% on the Control Group that feeds directly into GDP calculations."

     "Given that total sales unexpectedly fell 0.3% in January when the Control

Group was unchanged, the forecasts do not seem particularly strong," Haeling

added. "In the absence of upside surprises, such figures should be supportive

for both stocks and bonds following the mix of data in the latest Employment

Report."

     Following Friday's slight miss in average hourly earnings (0.1498% vs. 0.2%

est), Haeling noted "the risk of a significant upside CPI surprise seems to be

notably reduced. Consensus forecasts are for +0.2% m/m in the headline and core

measures, compared to +0.5% and +0.2%, respectively, in January."

     Credit Suisse economists expect retail sales to "increase 0.3% MoM in

February, after an unexpected decline of 0.3% in January. Retail sales for the

"control group" (an input to consumption in GDP) probably increased 0.4% MoM."

     After January's better than expected 0.3% MoM CPI print, CS expects "core

CPI to slow to 0.2% in February," while they expect "industrial production to be

sluggish for a second consecutive month, with growth coming in at 0.0% MoM for

February."

     Nomura economist expect a "steady 0.2% m-o-m increase in February core CPI

and a healthy rebound in February core retail sales."

     JP Morgan economists "continue to see downside risk to our 2.5% 1Q real GDP

forecast, in part because the January trade deficit came out wider than

expectations."

     Meanwhile, Treasury auctions (3Y, 10Y and 30Y) will occur Monday and

Tuesday in addition to 1-, 3- and 6M bill auctions, making the auctions a bit

more challenging ahead the Thursday, March 15 coupon settlement.

     JP Morgan noted 3Y note yields "have risen by 15bp since the February

auction, and the 3-year sector appears modestly cheap after adjusting for the

level of rates and the shape of the curve." On 10Y note yields "have risen by

8bp over the past month, and the 10-year sector appears about fairly valued

along the curve."

     "We find that Monday auctions have resulted in larger tails, lower

bid-to-cover ratios, as well as reduced end-user demand, when compared to other

auction days," JP Morgan added.

     The Federal Reserve also continues to gradually reduce its $4.5 trillion

balance sheet ($4.2 trillion in U.S. Treasuries and Agency MBS.) 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 (data, Fed speakers): 

- Mar 12 Feb ETI (106.93, --) 1000ET

- Mar 12 Feb BLS state payrolls (168.8k, --) 1000ET

- Mar 12 Mar NY Fed expectations survey 1100ET

- Mar 12 US Tsys $51B 3M bill auction 1130ET

- Mar 12 US Tsys $45B 6M bill auction 1130ET

- Mar 12 US Tsys $28B 3Y note auction 1130ET

- Mar 12 US Tsys $21B 10Y note auction re-open 1300ET

- Mar 12 Feb Treasury budget balance ($49.2b, -$223.0B) 1400ET

- Mar 13 Feb NFIB Small Business Index (106.9, --) 0600ET

- Mar 13 Feb CPI (0.5%, 0.2%) 0830ET

- Mar 13 Feb CPI Ex Food and Energy (0.3%, 0.2%) 0830ET

- Mar 13 10-Mar Redbook retail sales m/m (-0.5%, --) 0855ET

- Mar 13 US Tsys 4W bill auction 1130ET

- Mar 13 US Tsys $13B 30Y Bond auction Re-open 1130ET

- Mar 14 09-Mar MBA Mortgage Applications (0.3%, --) 0700ET

- Mar 14 Feb Final Demand PPI (0.4%, 0.1%) 0830ET

- Mar 14 Feb PPI ex. food and energy (0.4%, 0.2%) 0830ET

- Mar 14 Feb PPI ex. food, energy, trade (0.4%, --) 0830ET

- Mar 14 Feb retail sales (-0.3%, +0.4%) 0830ET

- Mar 14 Feb retail sales ex. motor vehicle (0.0%, 0.5%) 0830ET

- Mar 14 Feb retail sales ex. mtr veh, gas (-0.2%, --) 0830ET

- Mar 14 Jan business inventories (0.4%, 0.6%) 1000ET

- Mar 14 Mar Atlanta Fed inflation (3.2%, --) 1000ET

- Mar 14 09-Mar crude oil stocks ex. SPR w/w (2.41m bbl, --) 1030ET

- Mar 15 10-Mar jobless claims (231k, 228k) 0830ET

- Mar 15 Feb imports price index (1.0%, 0.3%) 0830ET

- Mar 15 Feb exports price index (0.8%, --) 0830ET

- Mar 15 Mar Empire Manufacturing Index (13.1, 15.0) 0830ET

- Mar 15 Mar Philadelphia Fed Mfg Index (25.8, 24.0) 0830ET

- Mar 15 11-Mar Bloomberg comfort index 0945ET 

- Mar 15 Mar NAHB home builder index (72, --) 1000ET

- Mar 15 09-Mar natural gas stocks w/w (-57Bcf, --) 1030ET

- Mar 15 Jan net TICS flows 1600ET

- Mar 15 Jan long term TICS flows 1600ET

- Mar 15 14-Mar Fed weekly securities holdings 1630ET

- Mar 16 Feb housing starts (1.326m, 1.290m) 0830ET

- Mar 16 Feb building permits (1.377m, 1.318m) 0830ET

- Mar 16 Mar NY Fed Business Leaders Index (15.9, --) 0830ET

- Mar 16 Feb industrial production (-0.1%, +0.4%) 0915ET

- Mar 16 Feb capacity utilization (77.5%, 77.8) 0915ET

- Mar 16 Mar Michigan sentiment index (p) (99.7, 99.0) 1000ET

- Mar 16 Jan JOLTS job openings level (5.811M, --) 1000ET 

- Mar 16 Jan JOLTS quits rate (2.2%, --) 1000ET

- Mar 16 Q1 St. Louis Fed Real GDP Nowcast (+3.37%, --) 1100ET

- Mar 16 Q1 NY Fed GDP Nowcast (+2.8%, --) 1115ET

--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$]