What Happened Last Week?
Waiting for October
It seems like September only just arrived, but sights are already set on October as the scene of the next major battle in the bond market. Friday’s trading session offered nothing of value, although it was “nice” to see a token correction in bonds after hitting multi-year highs Thursday. This week will be hard-pressed to reshape the narrative given the absence of big ticket data, but next week has it in spades.
Source: Matthew Graham, Mortgage News Daily 9/22/2023)
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) Inflation Nation, (2) The Talking Fed and (3) Domestic Flavor.
(1) Inflation Nation: The Fed’s preferred key measure of inflation, PCE, will be released on Friday. The bond market is expecting continued upward pressure on a MOM basis, particularly in the headline number which includes energy. But experts are expecting some YOY declines due to the base effect comparison factor. Also of key importance is the personal savings rate which was absolutely crushed in the prior release.
(2) The Talking Fed: Fed Chair Powell will speak on Thursday. Here is this week’s schedule:
- 09/26: Bowman
- 09/28: Goolsbee, Cook, Barkin and Powell
- 09/29: Williams
(3) Domestic Flavor: PCE is the most important release of the week but there will also be some other key reports. Consumer Confidence, Revised GDP and Chicago PMI will get a lot of attention from bond traders.
Treasury Dump
Here is this week’s auction schedule.
- 09/26: 2-year note
- 09/27: 5-year note
- 09/28: 7-year note
Market Wrap-Up
Rosie the Riveter
The September Dallas Fed Manufacturing Survey cratered with a contraction of -18.1 vs estimates of -12.0.
On Deck for Tomorrow
FHFA Home Price Index, Case Shiller Metro City Index, New Home Sales, Richmond Fed Manufacturing, Consumer Confidence and a 2-year Treasury note auction.