What Happened Last Week?
Calm Day to End a Calm Week
While Friday itself may not have resulted in a rally for the broader bond market, it was nonetheless just as calm as any other day last week in terms of volatility. That’s a bit more impressive considering it was the only day with big-ticket econ data. Overall, the week was marked by slow, steady gains for no particular reason. With that, the entirety of August, post-jobs-report did exactly what it was supposed to do. Specifically, it held a narrow enough range to avoid challenging the range set by the last jobs report day. This week–while shorter than normal due to the Labor Day holiday–is infinitely more capable of producing bond market volatility. Even the supporting actors are arguably heavy hitters in terms of econ data. Friday’s jobs report speaks for itself. Bottom line: additional labor market weakness could easily help bonds break new ground at lower yields while unexpected resilience could firmly reinforce recent floors.
Source: Matthew Graham, Mortgage News Daily 8/29/2025)
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Geopolitical, (2) Jobs, Jobs, Jobs, (3) The Talking Fed.
(1) Geopolitical: In the backdrop of the Ukraine/Russia war and a summit with China, India and Russia, we now have more tariff turmoil as a U.S. Appeals Court has ruled that the President does not have the authority to implement some of the tariffs. This will eventually end up in the Supreme Court and the tariffs will stay in place until then. However, new tariffs under that specific program will not happen. There are other ways to implement tariffs though, it’s just that they are more temporary in nature. We also have the end of the “de minimis” exception, which will put a huge crimp in the supply chain.
(2) Jobs, Jobs, Jobs: It will be Big Jobs Friday this week. But every day there will be a job or wage related data point with: ISM Manufacturing, JOLTS, ADP, Challenger Job Cuts, Weekly Claims, Unit Labor Costs, and ISM Services. On Friday, the focus will be on the revisions to the NFP and to see if the Unemployment Rate ticks up.
(3) The Talking Fed: The Fed’s Beige Book will be released on Wednesday and there will be a slew of talking Feds this week. But the speakers on Friday will get the most weight after getting their take on the jobs data.
Market Wrap-up
Domestic Flavor
Bob The Builder: July Construction Spending dropped by -0.1% which matched forecasts.
Incomes and Spending: Personal Incomes rose by 0.4% and Personal Spending increased by 0.5%, both matched market expectations.
On Deck for Tomorrow
Weekly Mortgage Applications, Factory Orders, JOLTS, and the Fed’s Beige Book.