What Happened Last Week?
Bonds Snooze through Data and Infrastructure Bill
Friday began with a morning of lackluster economic data being met with a yawn from the bond market. A few hours later, the long-awaited infrastructure bill finally arrived to a similarly lukewarm reception. As expected, it took a long time and was ultimately pared down significantly. With markets having already done so much to prepare, there was nothing left to do but hit snooze again. Finally, the 7-year Treasury auction wasn’t nearly interesting enough for bonds to get out of bed. Trading levels were basically flat for the entire day.Source: Matthew Graham, Mortgage News Daily 6/24/21
What’s on the Agenda for this Week?
Overview
This is a holiday-shortened week with an early close to the bond market on Friday for 4th of July weekend.
Three Things
The three areas that have the greatest ability to impact backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) The Talking Fed and (3) Domestic Flavor.
(1) Jobs, Jobs, Jobs: There will be a ton of jobs and wage related data this week culminating with Big Jobs Friday. This week’s barrage of jobs data includes: ADP Private Payrolls, Initial Weekly Jobless Claims, Challenger Job Cuts, ISM data, Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings, Average Work Week, U6 Underemployment and the Participation Rate.
(2) The Talking Fed: As there continue to be strong economic and inflationary readings, focus will continue on the Fed’s “transitory” spin. Will some “dovish” members begin to move towards a more “hawkish” stance in this week’s speeches?
(3) Domestic Flavor: The biggest (non-jobs) economic releases this week that can impact pricing are Consumer Confidence, Chicago PMI and ISM Manufacturing
Market Wrap-up
Domestic Flavor
Manufacturing: The national ISM Manufacturing PMI was red hot with a reading of 60.7 vs. estimates of 56.6. Prices Paid shot up 77.6 which is inflationary. The Employment Index, while not as robust as the other two metrics, was positive with a reading of 51.5 vs. estimates of 50.7.
Geopolitical: Voting is live for the Georgia run-off Senate race. It will determine which party will have control of Senate which is a very large factor in policies that can impact taxes, stimulus and the economy for the next several years.
On Deck for Tomorrow: Georgia Senate runoff election results? Congressional Certification of Electoral Votes? M Manufacturing, ADP Private Payrolls, Factory Orders and the Minutes from the last FOMC Meeting.