What Happened Last Week?
Why Stronger Jobs Data Gave Way to a Rate Rally
Anything over 300k is big number for nonfarm payrolls. Friday’s number was 315k. So why were rates able to rally in a reasonably big way after the data? There are a few different reasons. One of the best is that rates were prepared for the worst. That’s what the entire last month has been about. There were also a few holes to be poked in the labor market message, but those seem secondary to the mere “sigh of relief” that the data didn’t offer any surprises like those seen last month. Rates are still high overall and momentum is still data dependent. Today just happened to be a nice little victory.
Source: Matthew Graham, Mortgage News Daily 9/2/22)
What’s on the Agenda for this Week?
Three Things
The three areas that have the greatest ability to impact mortgage backed securities (MBS) backend pricing this week are: (1) Central Bank Palooza, (2) The Fed, and (3) Domestic Flavor.
(1) Central Bank Palooza: Key interest rate decisions and policy statements will be issued from Australia, Canada and the European Central Bank. All are expected to raise interest rates by at least 50 basis points. The markets will give the most weight to the ECB.
(2) The Fed: Fed Chair Powell will speak on Thursday and their Beige Book will be issued on Wednesday.
- 09/07: Mester, Brainard, Barr and the Beige Book
- 09/08: Powell, Evans, Balance Sheet
- 09/09: Evans and Waller
(3) Domestic Flavor: The biggest economic release of the week is the ISM Non-Manufacturing report that was issued on Tuesday. The next level lower of economic data would be today’s Initial Jobless Claims data.