What Happened Last Week?
Weaker Day, Stronger Week
Friday ended up seeing the bond market give up some ground with most of the weakness following the ISM Services data. The headline wasn’t the culprit. Rather, resilience in the employment index and persistence in the price index did the damage. Even then, the damage was minimal in the bigger picture and not sufficient to derail what ended up being a stronger week overall.
Source: Matthew Graham, Mortgage News Daily 10/3/2025)
What’s on the Agenda for This Week?
Overview
Most of the economic data on the calendar won’t hit this week due to the government shutdown.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Geopolitical, (2) The Talking Fed and (3) Treasury Dump.
(1) Geopolitical: The markets fully expect the government shutdown to continue throughout this week which will mean very little economic data will be released and more importantly, data is not being collected, etc., for future economic releases when the government does reopen. In the meantime, private sector data, internal Fed will get the attention of the bond market. Also, the Supreme Court will be back in session and will rule on tariffs and other Executive power issues. Across the pond, France has had (yet another) Prime Minister quit and Japan gets a new PM.
(2) The Talking Fed: It’s clear that we have growing divide in the Fed and there is much debate on the path forward which is actually very healthy for the decision-making process. Fed Chair Powell will speak this week along with a lot of Fed speakers:
- 10/06: Schmid
- 10/07: Bostic, Bowman, Miran, Kashkari
- 10/08: Musalem, Barr, Kashkari, Goolsbee
- 10/09: Powell, Bowman, Bar, Daly
- 10/10: Goolsbee, Musalem
(3) Treasury Dump: There is a large amount of debt that will be dumped into the marketplace this week with Thursday’s 30-year bond auction having the most weight for MBS.
- 10/07: 3-year NNote
- 10/08: 10-year note
- 10/09: 30-year bond
Market Wrap-up
Slow out of the Gate: It was a slow start to the week with zero macro data today and no real movement on the government shutdown. There is one talking Fed but Kansas City Fed President Schmid (voting member) will not speak until 4 pm.
On Deck for Tomorrow: 3-year Treasury note auction and Consumer Credit.