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  • White House says the goal is for a stimulus deal by Friday
  • Tonight’s Trump-Biden debate is still on
  • U.S. unemployment claims expected to continue to improve but remain high
  • U.S. existing home sales expected to reach new 13-year high
  • U.S. LEI expected to rise but has a long way to go before fully recovering
  • 5-year TIPS auction to yield near -1.24%


White House says the goal is for a stimulus deal by Friday 
— White House chief of staff Meadows Wednesday morning said that the goal is for a stimulus agreement within the next 48 hours, which would be Friday.  Meanwhile, House Speaker Pelosi on Wednesday said she’s “pretty happy” about the talks.

There are still differences to be ironed out, and there may not be a deal by the end of this week.  However, both the White House and Speaker Pelosi seem to be optimistic that a deal is close.

While the House could possibly vote to approve a compromise bill as soon as next week, Senate Majority Leader McConnell continues to play down any expectations for any vote in the Senate before the November 3 election.

Mr. McConnell plans to hold a vote to confirm Amy Coney Barrett as a Supreme Court justice this coming Monday.  Mr. McConnell then presumably wants to release his Republican Senators from Washington so that Senators who are up for reelection can spend their last week campaigning at home.

The odds for Senate passage of a stimulus bill after the election remain highly uncertain and depend heavily on what kind of mood Mr. McConnell and Republican Senators are in after the election.

Tonight’s Trump-Biden debate is still on — President Trump and former VP Biden both appear to be ready to show up for tonight’s debate in Nashville, Tennessee, moderated by NBC News’ Kristen Welker.  The 90-minute debate is scheduled to cover the topics of Covid, American families, national security, leadership, climate change, and race in America.

The election is now just 12 days away.  Early voting has been heavy with 42 million mail-in ballots already having been received and with nearly 12 million people having already voting in-person, according to the University of Florida’s U.S. Elections Project.

The betting odds at PredictIt.org, for whatever they are worth, have been surprisingly stable over the past two weeks.  Former VP Biden still has a 24-point lead, with betting odds for a Biden win at 65% versus 41% for President Trump.

The betting odds also favor Democrats winning full control of Congress.  The odds for control of the Senate are currently at 63% for the Democrats and 42% for the Republicans.  The Democrats have even stronger odds for maintaining control of the House, with the odds at 86% for the Democrats versus 16% for Republicans.

U.S. unemployment claims expected to continue to improve but remain high — The consensus is for today’s unemployment claims report to show a continued decline but remain at high levels that indicate a weak labor market.  Today’s claims report is expected to see continued distortions from the data from California, which is switching over to a new software system.

The consensus is for today’s weekly initial unemployment claims report to show a decline of -28,000 to 870,000, reversing part of last week’s +53,000 increase to 898,000. Continuing claims are expected to fall by -393,000 to 9.625 million, adding to last week’s decline of -1.165 million to 10.108 million.

There are still 681,000 more people filing for unemployment each week than in late February before the pandemic began.  Also, there are still 10.0 million more people on the unemployment rolls than before the pandemic.

U.S. existing home sales expected to reach new 13-year high — The consensus is for today’s Sep existing home sales report to show an increase of +5.0% to 6.30 million, adding to Aug’s increase of +2.4% m/m to 6.00 million.  Existing home sales in August reached a 13-year high as people continued to buy new homes to get a larger space to work from home or to escape from urban areas.

U.S. LEI expected to rise but has a long way to go before fully recovering — The consensus is for today’s Sep leading indicators report to show an increase of +0.6% m/m, adding to Aug’s +1.2% increase.

The LEI has risen in the past four months (May-Aug) but would still need to rise by another +5.2% to match January’s pre-pandemic record high of 112.0.  The LEI in August was still down by -4.7% on a year-on-year basis, although that was much better than the trough of -13.1% y/y seen in April.

5-year TIPS auction to yield near -1.24% — The Treasury today will sell $17 billion of 5-year TIPS.  The 5-year TIPS yield on Wednesday closed little changed at -1.24%.  The 5-year TIPS yield has been trading sideways in a very narrow range over the past month.

The 12-auction averages for the 5-year TIPS are as follows:  2.65 bid cover ratio, $48 million in non-competitive bids, 4.6 bp tail to the median yield, 16.6 bp tail to the low yield, and 37% taken at the high yield.  The 5-year TIPS is the second most popular security among foreign investors and central banks behind the 30-year TIPS.  Indirect bidders, a proxy for foreign buyers, have taken an average of 70.8% of the last twelve 5-year TIPS auctions, which is well above the median of 63.8% for all recent Treasury coupon auctions.

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