It's all Fedspeak after this morning's news of a drop in mortgage applications...Today is the last POMO of the current schedule in which $6-8 billion of bonds due 02/15/2015 – 07/31/2016 will be monetized. Tomorrow, the new monthly POMO schedule will be released at 2:00pm. Look to see if the Fed will be buying more than the usual fare of 17-30 bonds due to ongoing massacre at the long-end or if, instead, Bernanke is happy with letting the 30 Year plunge.
The Mortgage Bankers Association’s index of mortgage applications fell 5.5%, mainly due to a 7.7% drop in applications for refinancing. Applications for purchase loans were off 1.4% and remain in a depressed range.
10:00: Federal Reserve Chairman Ben Bernanke testifies before the House Budget Committee…The hearing is about “The Sate of the US Economy,” and the title of Chairman Bernanke’s remarks is “The Economic Outlook and Monetary and Fiscal Policy.” Given the general nature of this session, the bulk of the questioning is apt to be on the economy and on monetary policy despite the fact that the committee’s focus is on the budget. The chairman spoke last Thursday on “The Economy and Macroeconomic Policy,” and we suspect the text of his remarks will be very close to the message of that appearance.
17:45: NY Fed’s Brian Sack speaks on QE2…at the Philadelphia Fed. We’ve been more sparing in highlighting Fed presentations, but given the topic and the fact that Mr. Sack oversees the Fed’s Open Market Desk, we feel this should be flagged, though the fact that Chairman Bernanke is testifying earlier in the day is likely to blunt any market impact Mr. Sack might otherwise have had.
Via Goldman Sachs