FOMC left policy on hold and repeated the economy continues to expand FOMC left policy on hold and repeated the economy continues to expand "moderately." There were no surprises in the statement, or strong hints about what's to come in September. But the tone is be a little more upbeat than in June and certainly leaves September in play. The Fed labor market continued to improve with "solid job gains." The housing market continued to improve, though business fixed investment and net exports remained soft (as indicated in June). The inflation outlook remained the same too with the Committee still looking for price pressures to move toward the 2% target. Risks to the outlook on the economy and labor market are nearly balanced. The vote was unanimous.
U.S. Initial Jobless Claims Previ U.S. Initial Jobless Claims Preview: Claims data for the week of July 25 are out Thursday and should reveal a rebound to a 271k (median 272k) headline following last week's big dip to 255k. There has been a lot of volatility in the headlines this month as analysts move through auto retooling but the swings have largely balanced each other out as analysts discussed in our June 30 commentary.
Treasury 5-year auction was "A" caliber and much better than feared Treasury 5-year auction was "A" caliber and much better than feared. So who's afraid of the FOMC? The note stopped through at 1.625% versus 1.635% at the bid deadline (and it compares to June's 1.710%). There were $90.2 B in bids for a 2.58 cover, better than both last month's 2.39 and the 2.55 average. Indirect bidders were awarded a record high 67.5% versus the prior 56.6% (56.5% average). Direct bidders took 5.3% compared to 5.6% previously, with primary dealers taking 27.2% against June's 37.9%.
Treasury's $15 B 2-year FRN garnered rather average results Treasury's $15 B 2-year FRN garnered rather average results. The issue priced at a high discount margin of 0.077%, right in line with last month's 0.076% for the reopening. Bids totaled almost $59 B for a 3.93 cover, well above June's 3.74m even with the larger volume offered today. Indirect bidders took 53.3% versus the prior 56.4%.