What Happened Last Week?
How Did Powell Bring the Pain with As-Expected Remarks?
Friday morning the bond market appropriately and accurately priced in Powell’s Jackson Hole speech ahead of time, but the 3.6% losses in the S&P raised some questions. In other words, stocks didn’t look like they were as clairvoyant as bonds. One conclusion is that bonds may indeed have been a bit bummed by Powell’s bluntness, but then managed to pick up a few buyers as they fled from the stock market seeking safer havens. Fully expected or not, Powell’s message was entirely on-brand for all the recent Fed comments in August, including his own comments in the July 27th press conference.
Source: Matthew Graham, Mortgage News Daily 8/26/22)
What’s on the Agenda for this Week?
Three Things
The three areas that have the greatest ability to impact mortgage backed securities (MBS) pricing this week are: (1) Jobs, Jobs, Jobs, (2) The Talking Fed and (3) Rosie the Riveter.
(1) Jobs, Jobs, Jobs: There is a ton of job and wage related data this week that starts Tuesday with JOLTS and culminates with Big Jobs Friday.
(2) The Talking Fed: Now that we heard from everyone on the Fed last week… we will hear from a lot of them again this week. The bond market will be paying close attention to see if any of them are changing their tune or doubling down on the overall theme out of Jackson Hole.
(3) Rosie the Riveter: After weeks of regional and lower level manufacturing releases, the key measures of manufacturing will be issued this week with Chicago PMI, ISM Manufacturing and Factory Orders.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: The August Dallas Federal Reserve’s Manufacturing Survey showed negative ground in Texas with a -12.9 reading vs. estimates of -13.2. The prior month was -22.6.
On Deck for Tomorrow: Case Shiller Home Price Index, FHFA House Price Index, JOLTS, Consumer Confidence. Fed’s Barkin and Williams will speak.