What Happened Last Week?
Some Month-End Volatility Late in the Day
Yields were near 2-week lows 2 hours before the final trades on Friday, but rose several bps after that. The initial gains were driven mainly by economic data (Chicago PMI and Consumer Inflation Expectations), but the month-end trading environment is always a wild card on month-end days. If month-end buying was a factor, it would make sense to see some pullback when monthly closing levels were marked at 1pm ET. That’s exactly what we saw. Fortunately, it wasn’t a big deal for bonds or mortgage lenders. In fact, the entire week was distinctly lacking in volatility. Next week is a different animal thanks to big ticket econ data on 4 out of 5 days.
Source: Matthew Graham, Mortgage News Daily 3/28/2024)
What’s on the Agenda for This Week?
Overview
I hope you had a fantastic Easter weekend! The bond market is at full speed this week.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) The Talking Fed and (3) Rosie the Riveter.
(1) Jobs, Jobs, Jobs: There will be a ton of job and wage related data all week culminating in Big Jobs Friday. The bond market will be very sensitive to the pace of wage increases and number of job additions.
- 04/01: ISM Manufacturing – Employment Index
- 04/02: JOLTS
- 04/03: ADP Payrolls and ISM Services – Employment Index
- 04/04: Challenger Job Cuts, Initial Weekly Jobless Claims
- 04/05: Non-Farm Payrolls, Unemployment Rate, Average Hourly Earnings, Average Weekly Hours, U6 Underemployment Rate, Labor force Participation Rate.
(2) The Talking Fed: It is a packed calendar for Fed speeches this week/. The bond market will be keen to see if Waller and Bostic’s sentiment is an outlier or mainstream among the Fed.
- 04/01: Cook
- 04/02: Bowman, Daly, Williams and Mester
- 04/03: Powell, Bowman, Goolsbee, Barr and Kugler
- 04/04: Harker, Barkin, Kashkari
- 04/05: Logan, Bowman
(3) Rosie the Riveter: After some very disappointing regional manufacturing data last week, we will get the national ISM Manufacturing on Monday and Factory Orders on Tuesday.