What Happened Last Week?
Holidays Came and Went Without any Bond Market Fanfare
Two weeks ago, experts assumed the bond market would leave the office for the holidays and reassess during the first full week of 2025. For the most part, that’s how things went down. 10-year yields could have ended the week anywhere between 4.5 and 4.6 depending on Friday morning’s data. The higher levels got the nod due to slightly stronger ISM reading. The end. Bigger movement was always most likely to be on hold until and unless the early January data makes a strong, unified case for or against the economy. The early January data in question starts to roll in throughout the week, but as always, the biggest ticket is Friday’s jobs report.
Source: Matthew Graham, Mortgage News Daily 1/3/2025)
What’s on the Agenda for Week?
Overview
What will it take to see better pricing?
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) Treasury Dump.
(1) Jobs, Jobs, Jobs: This is a big week for job and wage related data with ISM Services, JOLTS, ADP and more that culminates with Big Jobs Friday with the Unemployment Rate, Non Farm Payrolls and Average Hourly Earnings. The bond market will be very sensitive to the hourly earnings.
(2) The Talking Fed: This is also a very busy week for Fed speak as the bond market is looking to find a bottom.
- 01/06: Cook
- 01/08: Waller, FOMC Minutes
- 01/09: Harker, Schmid, Bowman
(3) Treasury Dump: 2025 kicks off with the first auction. The bond market will be most reactive to Thursday’s 30-year bond auction.
- 01/07: 3-year note
- 01/08: 10-year note
- 01/09: 30-year bond
Market Wrap-up
Rosie the Riveter: November Factory Orders slid by -0.4% versus a gain of +0.5% in October.
Treasury Dump: Three days of selling debt into the marketplace kicked off with today’s shorter term 3-year note. $58B went off at a high yield of 4.332% and a bid-to-cover ratio of 2.62.
On Deck for Tomorrow: JOLTS, 10-year auction, ISM Services.