What Happened Last Week?
Solid End to a Solid Week
With essentially nothing meaningful on the economic or event calendar, the bond market did a good job sticking to a logical script of “more sideways and less volatile after CPI.” It remains to be seen if that script will remain in force all the way until the first full week of December, but there’s nothing in terms of scheduled events that promises to derail it. The only exception might be the weird trading dynamics occasionally seen on Thanksgiving week, but those must be taken with a grain of salt (or an ounce of gravy?) until being confirmed or rejected by more active markets in the following weeks. All we know right now is that this was a solid week that ended on a solid note.
Source: Matthew Graham, Mortgage News Daily 11/17/2023)
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) The Talking Fed, (2) Treasury Dump and (3) Turkey Day.
(1) The Talking Fed: The Minutes from the last FOMC meeting will be issued on Tuesday.
(2) Treasury Dump: There is an important bellwether 20-year Treasury bond auction this afternoon.
(3) Turkey Day: This is a holiday-shortened week with Thursday closed and a partial trading day on Friday.
Market Wrap-up
Domestic Flavor
Leading Indicators: The October LEI were worse than expected, down -0.8% versus estimates of -0.6%.
On Deck For Tomorrow: The Minutes from the last FOMC meeting, Existing Home Sales.
Treasury Dump
The 20-year $16B Treasury Bond auction today went off at a high yield of 4.780% and a bid-to-cover ratio of 2.58; it was a solid auction.