What Happened Last Week?
Don’t Sweat the Modest Weakness
Bonds began the day on Friday roughly unchanged and very flat for most of the morning. MBS began falling into the PM hours, ultimately resulting in a handful of negative reprices, about a quarter point of weakness, and a 4+bp jump in Treasury yields. If the frame of reference is limited to the domestic session, this is a moderate sell-off at best, but in the bigger picture, it was not even worth mentioning, let alone considering as a cause of concern. Bonds headed into the 3-day weekend at much less alarming levels than the previous week, and with the same requirement to wait for clarity on fiscal policies before the next major movement is revealed.
Source: Matthew Graham, Mortgage News Daily 4/17/2025)
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) The Talking Fed and (3) Domestic Flavor.
(1) Geopolitical: Really, this category “Trumps” any economic data or news this week as the MBS market and long bond market will continue to react severely to constant churn of headlines and news over “terminating” Fed Chair Powell, tariffs and more.
(2) The Talking Fed: The Fed’s Beige Book will be issued on Wednesday which means there will be a FOMC meeting just two weeks after that.
- 04/21: Goolsbee
- 04/22: Jefferson, Harker, Kashkari, Barkin, Kugler
- 04/23: Beige Book, Goolsbee, Waller, Hammack
- 04/24: Kashkari
(3) Domestic Flavor: There really isn’t a major economic release this week that can move pricing in a meaningful way. LEI will be interesting as will be the Atlanta Fed Business Inflation Expectations.
Treasury Dump
Here is this week’s auction schedule:
- 04/22: 2-year note
- 04/23: 5-year note
- 04/24: 7-year note
Market Wrap-up
Leading Down: The March Leading Economic Indicators (LEI) tanked from -0.2% down to -0.7% versus estimates of -0.5%.
Geopolitical: President Trump mentioned on the Truth Social platform that Fed Chair Powell is a “major loser” and needs to lower rates now to stave off a recession.
On Deck for Tomorrow: Richmond Fed Manufacturing, 2-year note auction.