What Happened Last Week?
Bonds End the Week and the Month at Best Levels
Both MBS and Treasuries were easily at their best levels of the month as of Friday’s close (whether you want to use the 3pm CME close or the 4pm NYSE close, which can be more of a consideration for bonds on a month-end trading day). The bond strength was all the more notable in light of a fairly swift bounce in the stock market. PCE data in the morning was a relative non-event. If anything, it helped pave the way for the stronger momentum thanks to the unrounded core month-over-month numbers coming in below forecast. From here, experts turn their attention to this week’s bigger ticket econ data, culminating in the next jobs report on Friday.
Source: Matthew Graham, Mortgage News Daily 2/28/2025)
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) Geopolitical, (2) Jobs, Jobs, Jobs and (3) The Talking Fed.
(1) Geopolitical: The “paused” tariffs on Mexico and Canada are set to go into effect on Tuesday as well as another round for China. The bond market will be sensitive to the actual outcome of if tariffs are postponed again, whether they are targeted to very granular and specific areas or are they more holistic for each country.
(2) Jobs, Jobs, Jobs: This week there will be a bunch of job and wage related data culminating in Big Jobs Friday. Overall, the stronger the jobs picture is – the worse it is for pricing. But the weaker the jobs data is – the better it is for pricing.
(3) The Talking Fed: After Friday the Fed will enter their “media blackout” period leading up to the next FOMC meeting. This week will be the Beige Book and Fed Chair Powell will speak:
- 03/03: Musalem.
- 03/04: Williams.
- 03/05: Beige Book.
- 03/06: Harker, Waller, Bostic.
- 03/07: Powell, Kugler, Bowman and Williams.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: Headline February ISM Manufacturing PMI remained in expansionary territory with a 50.3 reading which was lower than estimates of 50.5. However, the Prices Paid component shot up from 54.9 to 62.4 and the Employment Index tanked from 50.3 down to 47.6.
Bob the Builder: January Construction Spending dropped by -0.2% vs estimates of 0.0%.
On Deck for Tomorrow: Prelim Treasury Buyback announcement, TIPP Economic Optimism, Total Vehicle Sales.