What Happened Last Week?
Focus Shifted to This Week’s High Stakes CPI
Bonds lost ground at the fastest pace of the week on Friday, but even that ended up being insignificant in the bigger picture. The bottom line is that the week’s trading helped solidify and consolidate the gains seen after the previous week’s jobs report. With nothing of note on tap Friday, focus quickly shifted to the risks/opportunities inherent in this Tuesday’s CPI report–one of two key players when it comes to determining the next big move for rates (the other being the next jobs report in early September). Higher inflation would suggest bonds erase more of their post-NFP gains whereas lower inflation would argue for another challenge to the 10-year technical floor at 4.20%.
Source: Matthew Graham, Mortgage News Daily 8/8/2025)
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) Domestic Flavor and (3) Geopolitical.
(1) Inflation Nation: CPI will be on Tuesday and PPI on Thursday. There will also be Import and Export Prices and Inflation Expectations in the Consumer Sentiment Report on Friday. The main focus will be on CPI which is expected to increase by 0.2% on the headline number and 0.3% on the core.
(2) Domestic Flavor: Retail Sales will get the most attention from traders this week on Friday. Will the very weak Consumer Credit report portend a weak Retail Sales report?
(3) Geopolitical: It looks like a summit is scheduled on Friday in Alaska between Putin and Trump. Could there be some sort of agreement on Ukraine? Would Ukraine and Europe even agree? There will also be the ebb and flow of changing trade/tariff terms throughout the week.
The Talking Fed
Here is this week’s schedule:
- 08/12: Barkin, Schmid
- 08/13: Barkin, Goolsbee, Bostic
- 08/14: Bakin, Balance Sheet
Market Wrap-up
There were no domestic economic releases today.
On Deck for Tomorrow: CPI, Core CPI.