What Happened Last Week?
Rate Recovery Stumbles, but Jury Still Out
Experts will need to see the first several days of April before passing any judgment on potential trend shifts in the bond market. To be sure, last week’s moderate losses make things a bit less hopeful, but the point is that the jury is still out. After all, even after the losses, it was still the first winning week for bonds/rates since they began spiking at their quickest pace in decades at the beginning of March. These sorts of green weeks can hold plenty of promise for what lies ahead.
Source: Matthew Graham, Mortgage News Daily 4/1/22)
What’s on the Agenda for this Week?
Three Things
The three areas that have the greatest ability to impact mortgage backed securities backend pricing this week are: (1) The Talking Fed, (2) Domestic Flavor and (3) Geopolitical.
(1) The Talking Fed: Tthe Minutes from the last FOMC meeting will be issued on Wednesday. Fed Chair Powell said last week that it would contain some more background discussions on QT. The bond market is very much focused on the Fed’s pace of their balance sheet reduction which has yet to be announced. Several key members will also speak this week.
04/05: Kashkari, Brainard and Williams
04/06: Harker, FOMC Minutes
04/07: Bullard, Evans and Williams
(2) Domestic Flavor: This week is a much lighter economic calendar compared to last week’s juggernaut. But this week’s focus will be on ISM Non-Manufacturing and Initial Weekly Jobless Claims.
(3) Geopolitical: Covid remains a major concern as China has increased lockdowns once again. The Ukraine/Russia War will continue to dominate the headlines and bond markets will pay close attention to oil prices.
Market Wrap-up
Domestic Flavor
Manufacturing: February Factory Orders matched market expectations with a contraction of -0.5%. January was revised upward to 1.5%.
On Deck for Tomorrow
Reserve Bank of Australia Interest Rate Decision, Trade Balance and ISM Non Manufacturing.