What Happened Last Week?
Needle Threaded. Now What?
As always, big-ticket data and/or news headlines have potential energy in terms of their impact on bonds/rates. For instance, last week’s CPI could have caused a big move higher or lower. Same story with Trump/Powell headlines. Realized impacts of high-potential-energy events can vary quite a bit. All too often, separate considerations, data line-items, or headlines and subsequent retractions act as offsetting penalties that return the bond market to the original line of scrimmage. Such was the case last week and Friday didn’t do anything to change that. In fact, it solidified the feat. From here, in terms of what’s on the calendar, apart from the lame duck Fed announcement at the end of July, it’s mostly waiting for the next jobs report in early August.
Source: Matthew Graham, Mortgage News Daily 7/18/2025)
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) Central Bank Palooza, (2) Geopolitical and (3) Treasury Dump.
(1) Central Bank Palooza: Key interest rate decisions will be issued from the People’s Bank of China and the European Central Bank.
(2) Geopolitical: The constant swirl of Trump versus Powell will continue to dominate the headlines, as will any trade/tariffs as the August 1st deadline is fast approaching.
(3) Treasury Dump: There will be an important 20-year Treasury bond auction on Wednesday.
The Talking Fed
Fed Chair Powell will speak on Tuesday but he is not supposed to be speaking about future policy this close to the July meeting. The Atlanta Fed Business Inflation expectations will get a lot attention on Wednesday.
Market Wrap-up
Leading Nowhere: The June Conference Board’s Leading Economic Indicators Index dropped from 0.0% down to -0.3% versus estimates of -0.2%.
Central Bank Palooza: The People’s Bank of China kept their key interest rate unchanged.
On Deck for Tomorrow: Fed Chair Powell and Richmond Fed Manufacturing Index.