JPMorgan Econ FI-US Fixed Income Overview Markets brace for key policy week-106177410

PhoebeWhiteAC(1-212)834-3092HollyCunningham(1-212)834-5683NorthAmericaFixedIncomeJPMORGANphoebe.a.white@jpmorgan.comholly.cunningham@jpmorgan.comStrategyJ.P.MorganSecuritiesLLCJ.P.MorganSecuritiesLLC26January2024LiamLWash(1-212)834-5230liam.wash@jpmchase.comJ.P.MorganSecuritiesLLCUSFixedIncomeOverviewMarketsbraceforkeypolicyweek•TheTreasurycurvesteepenedandspreadsgroundtighterasDMcentralbanksinchedclosertoratecutsandeconomicdatawasfavorable•Wewillreceivekeymonetaryandfiscalannouncementsnextweek.WeexpecttheFedtoleavepolicyratesunchangedattheupcomingFOMCmeetingwhileadjustingfor-wardguidancefromahawkishtoneutralbias.WelookforTreasurytoannounceafinalroundofincreasestonominalauctionsizesinitsquarterlyrefundingannouncement•TheFedtweakedtheBTFPtoerasetherisklessarbitrageofferedtobanks,whichshouldlimitfurthergrowthinthefacility.Weseelimitedimplicationsformoneymarkets.WeseeriskstoanearlierendtoQT,whichshouldbesupportiveforswapspreads•Economics:Welookfornon-farmpayrollstohaveincreased225kandtheunemploy-mentratetohaveheldsteadyat3.7%inJanuary•Treasuries:Wecontinuetoholdlongsin5-yearTreasuriesand5s/30ssteepenersasyieldsshouldfallandthecurveshouldsteepenasweapproachthefirstease.WelookforTreasurytoannounceafinalroundofincreasestonominalauctionsizes:TreasuryremainsunderfinancedandtheT-billshareofdebtshouldremainabove20...