What Happened Last Week
Two Ways to View the Current Trend
Bonds were unchanged on Friday after selling off aggressively on Thursday. At first glance, that could be taken as confirmation of the weakness, but it was a thinly-traded post-holiday session that suggested the proverbial jury should remain out until the new week. Now today, bonds are trading the exact same range as seen on Friday. In that sense, we’re seeing additional confirmation of last week’s big sell-off.
Source: Matthew Graham, Mortgage News Daily 11/15/21)
What’s on the Agenda for this Week?
The three areas that can have the greatest ability to impact mortgage backed securities backend pricing this week are: (1) The Talking Fed, (2) Retail Sales and (3) Geopolitical.
(1) The Talking Fed: Speculation continues to mount as to who the next Fed President will be now that Treasury Secretary Yellen explicitly went from “Powell needs to be reappointed” to “we have a few good options” for Fed Chair. Several Feds will speak this week and in their commentary will focus on employment, inflation, rates, etc.:
11/16: Bostic, Harker, Daly
11/17: Mester, Daly, Evans, Bostic
11/18: Bostic, Williams, Evans, Daly, Bowman
11/19: Waller, Clarida
(2) Retail Sales: A key measure of our economy, will be released on Tuesday. The last time this was released, it surprised to the upside. Will higher wages help or will inflation concerns cut back on spending?
(3) Geopolitical: There will be a key summit with Biden and Xi and experts will be looking for any news on tariffs, Taiwan and trade. Also in focus is the Brexit transition and if Great Britain will trigger Article 16 over some issues with Northern Ireland and the EU.
Manufacturing: The November NY Empire Manufacturing Index grew at almost double the October pace, coming in at a very strong 30.9. Market estimates were in the 21 to 22 range.
On Deck for Tomorrow: Retail Sales, Import and Export Prices, Industrial Production, NAHB Housing Market Index.