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Rates End Week Lower As Fed Minutes Indicate Uncertainty

The holiday-shortened week was fairly quiet as Treasury yields traded in a 5-6 bps range, ending one to four bps lower as the curve steepened slightly.  The fixed income market largely took its lead from the week's economic indicators and Tuesday's release of the minutes from January's FOMC meeting. 

The meeting minutes indicated a large degree of uncertainty among Committee members about the future path of Fed funds.  Unexpectedly, the Committee widely favored ending the runoff of the Federal Reserve's balance sheet this year, which is earlier than many market participants expected. 

The week's economic releases did little to clear up the muddy economic outlook, as a measure of business investment declined in December (for the fourth month out of the last five) and January's existing home sale declined on a lack of affordable homes.  Meanwhile, the labor market remains strong as initial jobless claims continued to decline following the shutdown-related spike.

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