What Happened Last Week?
Minimal Selling Leaves Focus on CPI
The first order of business Friday morning was to reconcile the weaker NFP reading with the seemingly illogical bond market sell-off. That was easy enough to do considering the solid drop in unemployment along with the big revisions to the past 2 months of payrolls. It was all the more palatable due to the modest size of the sell-off (especially modest as far as jobs report days are concerned). Thanks to the rally earlier in the week, bonds ended the week at slightly stronger levels. Bottom line, volatility is minimal. This week’s CPI is the only other report that can hold a candle to NFP when it comes to rocking the bond market’s boat.
Source: Matthew Graham, Mortgage News Daily 2/7/2025)
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) Inflation Nation, (2) The Talking Fed and (3) Retail Sales.
(1) Inflation Nation: There will be several key inflation related data releases this week with CPI, PPI and Import Prices, with the most weight being given to Core CPI on Tuesday.
(2) The Talking Fed: Fed Chair Powell will speak twice this week as he gives his semi-annual testimony to the House and Senate. It is a packed week of Fed speakers:
- 02/11: Hammack, Williams, Powell
- 02/12: Bostic, Bowman, Powell
(3) Retail Sales: January Retail Sales will hit on Friday and is expected to contract by -0.1% on a MOM basis for the headline number.
Treasury Dump
Here is this week’s Treasury auction schedule.
- 02/11: 3-year note
- 02/12: 10-year note
- 02/13: 30-year bond
Market Wrap-up
Today
There were no domestic events or speeches today.
On Deck for Tomorrow
NFIB Small Business Optimism, Fed Chair Powell Testimony, 3-year Treasury Note auction.