Traders and investors will get a welcome reprieve from top-tier US economic data in the new week.

Last week was a veritable run through the gauntlet. Day after exhausting day of relevant macro inputs ended in fittingly dramatic fashion with a payrolls beat so anomalous that it raised questions about the data even among serious observers.

Suffice to say the Fed’s “higher for longer” narrative was bolstered by the jobs report, even as the soft landing crowd could take comfort in cooler-than-expected reads on compensation and unit labor costs in Q4. The job openings figures, though, still betray a hopeless imbalance between demand for labor and the supply of willing and qualified workers.

Through it all, and despite Jerome Powell’s fraught efforts to strike a balance between acknowledging disinflation progress and convincing markets of the Fed’s dedication to finishing the job, terminal rate pricing changed little. Or at least as far as most market participants are concerned. Rates traders will tell you the nuanced tale, if you’re so inclined.

5% is still seen as the peak and March is pretty much fully-priced for 25bps, but what happens after that remains unsettled.

“We think Powell’s press conference suggested a slight change in the Fed reaction function as the Fed seems to become more optimistic about a soft landing and a decline in inflation without pain in the labor market, effectively an ‘immaculate disinflation,'” TD analysts including Jan Groen and Priya Misra said, adding that although the jobs report “may reiterate the Fed’s confidence in the economy,” the read-through for inflation was less encouraging. “The monthly pace of average hourly earnings were revised higher for December, and should create some nervousness at the Fed about a decline in core services ex-shelter inflation,” the bank went on.

Markets continued to trade on the general assumption that inflation has peaked, and that developed market central banks are nearing the end of their respective hiking cycles. As discussed here at exhaustive length over the past week, that raises the specter of a renewed wealth effect, which could in turn keep inflation elevated in the services sector.

There’s no better manifestation of that than falling US mortgage rates, which have tracked 10-year Treasury yields lower, to the apparent delight of US home buyers.

Pending home sales rose in December, in what might presage a housing recovery that’ll probably feel premature to a Fed that needs to ensure any “pipeline” shelter disinflation isn’t “transitory.”

The official shelter gauges haven’t even begun to fall yet, and the last thing policymakers need is for housing-related inflation to recede on a delay and then rebound again (say, late this year) due to the animal spirits currently stirring as a result of the rally in bonds and stocks.

A quick spin through Redfin’s news section reveals that a “$2,500 monthly budget buys a $400,000 home for the first time since September.” In other words, some renters can afford the median existing house for the first time in four months. But that’s about where the good news stops. “A buyer on that budget still has about $95,000 less in spending power than they did a year ago, when rates were sitting around 3.5%,” Dana Anderson wrote.

The data docket in the US is almost completely blank this week. Only jobless claims and the preliminary read on University of Michigan sentiment will be immediately relevant for markets. Consumer credit figures for December, due Tuesday, could help refine the consumption narrative, though. Spending faltered during the final month of 2022, and it’ll be interesting to see whether what spending there was came courtesy of the plastic.

Revolving credit rose almost $17 billion in December, and card rates are obviously rising. The chart above is updated with the latest data collected by the Fed. According to Bankrate, current credit card rates are even higher, at nearly 20%.

Supply is also relevant this week. Treasury auctions went swimmingly in January, but given renewed concerns about America’s commitment to the “full faith and credit” promise, and also signs of diversification away from USD assets by some foreign buyers, gauging demand is important.

“It is a marquee week in the primary market,” BMO’s Ian Lyngen and Ben Jeffery wrote, juxtaposing “the overall trend of weak auctions in 2022” with this year’s “strong start… that has come as a sharp reversal of the discounts that were required via the string of tails last year, especially in the 10-year sector.”

Lyngen and Jeffery went on: “Particularly as it pertains to refunding offerings, another round of strong results on Wednesday and Thursday would indicate that the stop through at every coupon auction in January has more staying power than simply a stronger bid associated with a new year and the deployment of capital that spent most of 2022 on the sidelines.”

That’s relevant not just for Treasury (and any buyback plans Janet Yellen may be pondering), but also for the Fed and QT. Zoltan Pozsar has suggested QE may be restarted at some point to protect market functioning in the event of geopolitical or auction-related “tail” risk.

In the absence of other fundamental data, traders will focus on a cacophony of Fed speak, including scheduled remarks from Barr, Bostic, Cook, Harker, Kashkari, Waller, Williams and a man called Jerome, who’s had some trouble recently when it comes to herding wild-eyed cats.