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The Week Ahead: Treasury Budget Forecasts Potential Rate Changes

American-flag-money-300x198On Monday at 2 p.m. ET, the United States Department of the Treasury will release the latest Treasury Budget. This monthly accounting shows the Federal Government's surplus or deficit at a given time, which is affected by factors such as taxation and spending—both of which have been in the news in a big way of late, thanks to the tax reform bill and recent Congressional budget battlesBloomberg reports that the 10-year Treasury yield hit 2.88 percent this week, the highest percentage since January 2014. As succinctly explained by The Balance, "When Treasury yields rise, banks charge higher interest rates for mortgages. Investors in mortgage-backed securities then demand higher rates. They want compensation for the greater risk."

Speaking to reporters Thursday, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, said, “Some participants that I’ve talked to have said, look, you know, they’re suddenly realizing that Treasury is going to be doubling the amount of debt issuance. I think that was not fully baked into some people’s thinking.”

Here’s what else is happening in The Week Ahead.

  • Cleveland Federal Reserve Bank President Loretta Mester speaking at the Dayton Area Chamber of Commerce Government Affairs Breakfast Series in Dayton, Ohio, Tuesday, 8 a.m. ET
  • MBA Mortgage Applications, Wednesday, 7 a.m. EST
  • Atlanta Fed Business Inflation Expectations, Wednesday, 10 a.m. ET
  • Jobless Claims, Thursday, 8:30 a.m. EST
  • Philadelphia Fed Business Outlook Survey, Thursday, 8:30 a.m. ET
  • Housing Market Index, Thursday, 10 a.m. ET
  • Fed Balance Sheet, Thursday, 4:30 p.m. EST
  • Housing Starts survey Friday, 8.30 a.m. ET
  • Consumer Sentiment, Friday, 10 a.m. ET

About Author: David Wharton

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