Weekly Mortgage Overview: 3/6/2023

By March 6, 2023March 8th, 2023Mortgage Overview

What Happened Last Week?

Bonds Start Strong and Finish Stronger Despite Decent Data

Friday’s trading action flew in the face of the prevailing reaction function for the bond market. Specifically, an important economic report was stronger than expected, but bonds rallied nonetheless. Bonds did sell after the data, but had other reasons to move in the other direction for most of the rest of the day. Data ended up being a speedbump for a recovery that happened for other reasons.
Source: Matthew Graham, Mortgage News Daily 3/3/23)

What’s on the Agenda for this Week?

Three Things

The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) The Talking Fed, (2) Jobs, Jobs, Jobs and (3) Central Bank Palooza.

(1) The Talking Fed: The bond market has certainly shifted its expectations on the path of future rate hikes from the Fed over the past 30 days. The spotlight this week will be on Fed Chair Powell as he testifies before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. A few other Feds will speak this week as Friday starts their media blackout period. The Fed’s Beige Book will be issued on Wednesday which is prepared in advance of the next Fed FOMC meeting.

(2) Jobs, Jobs, Jobs: There is a ton of jobs and wage related data this week, culminating in Big Jobs Friday. This week will be JOLTS, ADP Payrolls, Challenge Job Cuts, Weekly Jobless Claims, Non-Farm Payrolls, Average Hourly Earnings, Unemployment Rate, U6 Underemployment Rate, Labor Force Participation Rate and Average Weekly Hours.

(3) Central Bank Palooza: Key interest rate decisions and policy statements will be issued out of the Reserve Bank of Australia, Bank of Canada and Bank of Japan.

Treasury Dump

There are some very important Treasury auctions this week that will be heavily influenced by Fed expectations.

  • 03/07: 3-year note
  • 03/08: 10-year note
  • 03/09: 30-year bond

Market Wrap-up

Domestic Flavor

Rosie the Riveter: January Factory Orders decreased by -1.6% vs. estimates of -1.8%.

Across the Pond

Eurozone: Retail Sales were 0.3% vs. estimates of 1.0%.

On Deck for Tomorrow

Reserve Bank of Australia Interest Rate Decision, Fed Chair Powell Senate Hearing, 3 year Treasury note auction, Consumer Credit Change.