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Week Ahead: Coronavirus, MOAR Powell, and US Treasury Auctions

After a jam packed, Central Bank dominated week, things will begin to slow down as spring arrives.  There were no major surprises from the FOMC, BOE, and BOJ last week, however the peripheral central banks of Turkey and Norway were notably concerned about inflation.  This week, as the vaccine rollouts continue, the coronavirus makes its way back to the front page as Europe is said to be facing a 3rd wave of new cases.  Can Europe get vaccines quick enough to thwart another major lockdown?  In addition, Powell will be speaking 3 times this week, however after his dovishness at the FOMC meeting just last week, there should be no change in his views.  In addition, the US will hold 2-year, 5-year, and 7-year auctions.  Markets will be watching to see if the demand is there to make them successful!

Central Banks

If there were any major surprises from the major central banks which met last week, it’s what they didn’t say! After the rise in yields and inflation expectations over the past month, some traders thought  the Fed and the BOE would be a bit less dovish.  However, Powell was extremely dovish, noting that they are years away from hiking rates.  Investors were hoping the BOE’s Bailey would back up his comments from January’s meeting that they “did not mean to imply that they would use negative rates”. Instead, he hedged himself and noted that the BOE will do more if necessary.  See complete recaps below

Europe and the Coronavirus

In the US, after a slow start, vaccine rollouts are going smoothly.  Biden reached his goal of 100 million jabs in 100 days well in advance of his deadline and he pledged that all adults in the US will be eligible for COVID-19 vaccines by May 1st! Cities which haven’t done so already, are expanding indoor capacity limits and getting children back to school. In the UK, more then 26 million people have been vaccinated.  Although there was a hiccup with the AstraZeneca vaccine, they are expecting to have everyone eligible to receive a vaccine by late July.  Schools are reopening and they have a plan to reopen the economy.

On the other hand, countries in the EU are facing increasing number of new cases, as well as, new or extended lockdowns and restrictions. The faster-spreading variants seem to be outpacing the rollout of the vaccines. Northern France and Paris are in lockdown for a month.  Italy has imposed nightly curfews.  Each region is assigned a color zone, red, orange and white, depending on infection rates.  All but 1 region is in the red or orange zone. In Germany,  restrictions were expected to expire on March 22nd.  However, Merkel is meeting with Head of States on Monday to determine whether lockdowns should be extended.  According to Germany’s health minister, hopes are dim that restrictions will be lifted. Vaccine inoculations were halted across much of Europe recently as the AstraZeneca vaccine was thought to cause blood clots.  However, the European Medicines Agency (EMA) said the vaccine is “safe and effective” on Thursday, and many countries began distribution once again. Most of the new cases are now faster-spreading variants, such as the B.1.1.7 (UK variant).  It’s now a “variant vs vaccine” race to control the pandemic.  (Note: new variants are showing up in other regions of the world as well, including the US.  Only time will tell if other areas can vaccinate quicker than the variants morph.)  The European “3rd wave” will be a topic to watch this week.

MOAR Powell

US Fed Chairman Powell, in addition to other Fed members,  is set to speak on Monday, Tuesday, and Wednesday this week.  However, the first 2 discussions are with the BIS regarding innovation in a digital age.  The testimony on Wednesday is the one to watch.  Powell will be speaking before the Committee on Banking, Housing and Urban Affairs at the US Senate. Although he is unlikely to change his tune, senators may be looking for clarification to some of his recent comments regarding interest rates and inflation.  Even after the FOMC meeting on Wednesday, bond markets seemed to be calling Powell’s bluff. However, he has indicated that the Fed wants actual data, not just forecast, before they begin tapering.


This week, the US Treasury will auction off $180 billion in 2-year, 5-year, and 7-year notes, as well as $26 billion in 2-year floating rate notes (FRN).  Recall on February 25th, when the demand for the 7-year auction was weak.  This began a swift rise in yields as traders began to worry about international demand.  Rates are higher now, and perhaps the price is right for buyers.  These auctions will be closely monitored.  A repeat of the February 25th 7-year auction could see yields soar even higher.  Since February 25th, 10-year yields are nearly 36 bps.  The Fed says this is transitory.  We’ll know more this week.


 The earnings calendar is very light this week, however reddit users will be monitoring the earnings release of their favorite meme stock, GME.  Other notable earnings this week are ADBE and PTR.

Economic data

The economic data calendar is also light this week, as next week brings month-end and beginning of April data.  However, in addition to Powell and the auctions, there is a host of UK data on the docket for this week.  We also get our first look at global PMIs.  Other important economic data is as follows:


  • US: Existing Home Sales


  • New Zealand: Westpac Consumer Confidence (Q1)
  • UK: Claimant Count Change (FEB)
  • US: New Home Sales (FEB)
  • US: 2-Year Note Auction
  • US: 52 Week Bill Auction


  • Global: Manufacturing and Services PMIs Flash
  • New Zealand: Trade Balance (FEB)
  • Japan: BOJ Monetary Policy Meeting Minutes
  • UK: Inflation Data (FEB)
  • US: Durable Goods Orders (FEB)
  • US: Fed Chairman Powell Speech
  • US: 5-Year Note Auction


  • Germany: GfK Consumer Confidence (APR)
  • US: GDP Price Index Final (Q4)
  • US: 7-Year Note Auction


  • Japan: Tokyo CPI (MAR)
  • UK: Retail Sales (FEB)
  • Germany: Ifo Business Climate (MAR)
  • US: Personal Income (FEB)
  • US: Personal Spending (FEB)
  • US: PCE Price Index (FEB)
  • US: Michigan Consumer Sentiment Final (MAR)

Chart of the Week: Daily German Dax

Source: Tradingview,

On a daily timeframe, the DAX has been trading is an orderly upward sloping channel since early November 2020 and posted all-time highs on March 18th at 14,810.90.  However, the German index ran into a confluence of resistance levels near the high, just below the upward sloping, top trendline of the channel and a pair on 161.8% Fibonacci extensions.  The first was near 14,671 from the January 8th highs to the February 1st lows and the other was near 14,777 from the September 3rd, 2020 highs to the October 30th  2020 lows. In addition, price formed a shooting star candlestick formation, indicating a possible reversal.  Price did pull back 0.25% on Friday, however more downside may be ahead.  Horizontal support is at the lows of March 15th near 14,424 and then a series of previous highs near 14,135.  The upward sloping bottom trendline of the channel sits just below there near 13.910.   Resistance is back at Thursday’s all-time highs near 14,810.90 and then the top upward sloping trendline of the channel near 14,970, which is just ahead of the psychological round number resistance level of 15,000.

This week may be a week of (in)digestion for the markets as traders await the end-of-month data and payrolls in early April.  Watch to see how the bond markets respond to coronavirus headlines, Powell, auctions, and economic data.  Yields appear to be in the driver’s seat as far as market direction is concerned.

Remember this saying: “Bond traders are always the first to know; the Fed is always the last to know!”

Have a great weekend and please remember to always wash your hands!

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