What Happened Last Week?
Uneventful Conclusion to Another Volatile Week
Friday morning began like many other recent mornings with economic data making a strong, logical case for bonds to move in a certain direction only for bonds to subsequently reverse course and do something else. In Friday’s case, it was Retail Sales that pushed yields higher at first. Perhaps it was also Retail Sales that allowed for a friendly correction as traders digested the report’s internal components (which weren’t as favorable as the headline). Either way, bonds were able to get all the way back to positive territory by the afternoon. That’s good in and of itself, but with 10-year yields still over 4.4%, the uptrend is still intact in the bigger picture.
Source: Matthew Graham, Mortgage News Daily 11/15/2024)
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Geopolitical, (2) Treasury Dump and (3) The Talking Fed.
(1) Geopolitical: The markets are eagerly awaiting the rest of the major cabinet picks this week, especially for Treasury Secretary.
(2) Treasury Dump: There is an important 20-year Treasury bond auction on Wednesday.
(3) The Talking Fed: Several Feds will talk this week, including Goolsbee, Hammack, Schmid, Cook, Bowman, and Barr.
Market Wrap-up
Taking it to the House: The November NAHB Home Builders’ Sentiment Index rose from 43 to 46 but is still below the important level of 50.0 which is neutral.
The Talking Fed: Chicago Fed President Goolsbee said that the Fed’s true “neutral” rate is significantly lower than the current Fed policy rate.
On Deck for Tomorrow: Housing Starts and Building Permits.