What Happened Last Week?
Boring Week for Bonds
It’s always a bit jarring to go from something like last Friday’s jobs report response to a subsequent week with very little movement. Neither PPI nor Consumer Sentiment caused a stir Friday, but volume suggests traders were willing to react to PPI if it had fallen far from forecasts. In general, big ticket data will need to say bad things about the economy in order to recover any decent amount of what was recently lost. To that end, experts are waiting all the way until this Thursday morning for the next round of reasonably relevant reports.
Source: Matthew Graham, Mortgage News Daily 10/11/2024)
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) Central Bank Palooza, (2) Retail Sales and (3) Geopolitical.
(1) Central Bank Palooza: The ECB’s Interest Rate Decision and Policy Statement will be on Thursday and the bond market will be sensitive to ECB President LaGarde’s comments and forward guidance.
(2) Retail Sales: Thursday’s Retail Sales report will be the most important economic release of the week. It is expected to rise by 0.3% on the Headline Number but only by 0.1% on the Ex-Trans number. Consumer Credit last week was very weak.
(3) Geopolitical: This is really about oil as prices have leveled off and even gradually moved lower which, if it continues, will be a positive for pricing.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: The October Empire Manufacturing Index showed that the NY Fed Manufacturing District cratered once again… falling to -11.9 versus estimates of +2.7.
On Deck for Tomorrow: Weekly Mortgage Applications, Import and Export Prices.