What Happened Last Week?
Bonds Brace for Stormier Weather After Last Week’s Smooth Sailing
Despite a few inconsequential ups and downs, bonds ultimately traded with forgettable, sideways momentum last week. Friday did nothing to change that–especially after mid-day gains courtesy of optimism surrounding over-the-weekend trade talks between the U.S. and the EU. The gains corresponded with the news headlines about the U.S./EU meeting and bonds held steadily sideways after that. The incoming week is completely different in terms of calendar-based volatility potential. There are relevant events on every single day culminating with “peak relevance” in the form of Friday’s big jobs report.
Source: Matthew Graham, Mortgage News Daily 7/25/2025)
What’s on the Agenda for This Week?
Four Things
The four areas that have the greatest ability to impact MBS backend pricing are: (1) The Talking Fed, (2) Tariffic, (3) Inflation Nation and (4) Jobs, Jobs, Jobs.
(1) The Talking Fed: There will be announcements from two Central Banks on Wednesday with the Bank of Canada and our own Fed. No one expects any real changes from our FOMC but the market will be keenly focused on the number of dissenting votes and the setup for a cut (or not) in September.
(2) Tariffic: After last week’s announced deal with Japan, the week starts off with a deal with the European Union and talks in Sweden with China where they have already announced another 90-day pause to keep negotiations flowing. The August 1st deadline for all other countries (this Friday) is fast approaching and more trade announcements are expected, particularly from India.
(3) Inflation Nation: The “official” measure of inflation, PCE, will be on Thursday, just one day after the FOMC meeting. Will the impact of tariffs finally show up in the data? Or is it being absorbed to an extent that it’s not a big factor?
(4) Jobs, Jobs, Jobs: What is the real jobs picture? Experts see weakness in the regional and private sector data sets but see stability in the government released data. This Friday will be the BLS’s jobs data with Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings and more. Plus throughout the week will be a ton of job and wage related data such as JOLTS, ADP, Challenger Job Cuts, ISMs, Employment Cost Index and more.
Bonus Round: There is a lot more than just jobs and inflation this week with Consumer Confidence, and the preliminary GDP is expected to rebound from -0.5% to +2.5%, which is a huge move.
Market Wrap-up
Rosie the Riveter: The July Dallas Fed Manufacturing Survey surprised to the upside by rising from -12.7 to +0.9.
Treasury Dump: This week’s round of dumping debt into the market place kicked off with two auctions today. The 2-year note went off at a high yield of 3.920% and a bid-to-cover ratio of 2.62. The 5-year note went off at a high yield of 3.983% and a bid-to-cover ratio of 2.31.
On Deck for Tomorrow: JOLTS, Consumer Confidence, Case Shiller YOY HPI, FHA MOM HPI, 7-year note auction, FOMC starts two days of meetings.