What Happened Last Week?
Mortgage Rates End Week as it Began
The week before last was a wild one for mortgage rates with the lowest levels in nearly a year on Monday and an abrupt spike after Wednesday’s Fed announcement. Last week was completely different with each day seeing minimal change compared to the previous session. Friday was no exception. This was actually a logical outcome based on the morning’s economic data. PCE inflation–the broadest inflation metric and the Fed’s favorite–came in right in line with forecasts. This week is highly uncertain due to the potential government shutdown. It’s not the shutdown itself that would matter for rates. Rather, it’s the absence of several important economic reports including THE most important one of them all: Friday’s jobs report.
Source: Matthew Graham, Mortgage News Daily 9/26/2025)
What’s on the Agenda for This Week?
Overview
What are the different govt shut down scenarios and how could bonds react?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week. (1) Geopolitical, (2) Jobs, Jobs, Jobs and (3) ISMs.
(1) Geopolitical: There are plenty of hot spots geo politically; however, our own potential government shutdown is getting the most weight as the September 30th deadline is fast approaching. Will there be a “stop gap” measure (i.e., kicking the can down the road for the 100th time), or will there be an actual resolution? Or is the government shut down for a short period or a long time?
(2) Jobs, Jobs, Jobs: IF there is no government shut down, then Friday’s Jobs data will be the biggest market mover as the bond market focuses on NFP revisions and the rest of the data. However, throughout the week there is a ton of job and/or wage related data with JOLTS, ADP, ISMs, Challenger Job Cuts and Initial Claims.
(3) ISMs: The ISM Manufacturing and Non-Manufacturing are non-government reports, so they will hit the markets regardless of a shutdown. The ISMs contain solid data on Employment and Inflation (prices paid) that the bond market is very reactive to.
Market Wrap-up
Taking it to the House: The August Pending Home Sales Index was much hotter than expected, rising by 4.0% vs estimates of only 0.7%.
The Talking Fed: Cleveland Fed President Beth Hammack (non-voting member) stated that inflation may remain above the target level until 2028, which is a key reason she opposed a rate cut.
On Deck for Tomorrow: Case Shiller HPI, FHFA Housing Price Index, Chicago PMI, Consumer Confidence, JOLTS.