What Happened Last Week?
Traders Hit Snooze Button, with Next Alarm Set for Fed Day
Nothing really happened in the bond market Friday and there wasn’t much to discuss. Consumer Sentiment gave the impression that it helped bonds, but it was just in the right place at almost the right time (10 minutes too early to get credit). The day ended up being super sideways despite early volatility. Looking back to Tuesday, traders basically hit the snooze button after the massive post-CPI sell-off, and set their next alarm for this Wednesday’s Fed announcement. Sure, there was some range-bound volatility at times, but this was nothing more than a bit of tossing and turning that often precedes sounder sleep.
Source: Matthew Graham, Mortgage News Daily 9/16/22)
What’s on the Agenda for this Week?
Overview
This is a very pivotal week that includes the Fed, MBS purchases, path of mortgage rates, and more.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) The Talking Fed, (2) Central Bank Palooza and (3) Treasury Dump.
.(1) The Talking Fed: The long-awaited FOMC meeting is this week and on Wednesday there will be a lot out of the Fed including:
- An Interest Rate Hike in the 50BPS to 100BPS range with most of the market pricing in a 75BPS hike.
- The release of their Economic Projections (which is used to create the much maligned Dot Plot Chart) which will communicate the Fed’s expected path of inflation, growth and rates.
- A live presser with Fed Chair Powell.
(2) Central Bank Palooza: Key interest rate decisions will be issued by the Bank of Japan, Bank of England, Swiss National Bank and the Risksbank (Sweden).
(3) Treasury Dump: There is an important 20-year Treasury bond auction on Tuesday.
Market Wrap-up
Taking it to the House
The September NAHB Housing Market Index showed contraction for the second straight month, dropping to 46 vs. August’s sub-par reading of 49.On Deck for Tomorrow
People’s Bank of China Interest Rate Decision, New Housing Starts and Building Permits, FOMC begins two days of meetings and our 20-year Treasury bond auction.