What Happened Last Week?
Markets Rocked by New Tariff Drama
Bonds were already having a decent day Friday morning with overnight market movers bringing yields in line with the lower end of the recent range. Mid-day drama caused massive selling in stocks which spilled over and made for an extension of the already-decent bond rally. The culprit? An unexpected tariff threat from Trump. Then, just minutes before the end of trading for the 3-day weekend, an official announcement (with cryptic references to untoward actions by China). Bonds managed to rally a bit more as stocks sank more, but there’s no telling how this will carry over. Tariffs haven’t been reliably beneficial for bonds, but they were beneficial Friday.
Source: Matthew Graham, Mortgage News Daily 10/10/2025)
What’s on the Agenda for This Week?
Overview
This is a holiday-shortened week where there may not be any meaningful economic data.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) The Talking Fed, (2) Geopolitical and (3) IF.
(1) The Talking Fed: This is a big week for the Fed as they lean into their media blackout period next week. The bond market will focus on a seemingly very split FOMC with the issue of their Beige Book and a speech from Fed Chair Powell.
- 10/14: Powell, Bowman, Waller and Collins
- 10/15: Beige Book, Miran, Bostic, Waller and Schmid
- 10/16: Barkin, Waller, Barr and Bowman
- 10/17: Musalem
(2) Geopolitical: There is peace in the Middle East and a government shutdown in the U.S. The Senate is back in session today but how long can that drag out?
(3) IF: IF the government opens again, THEN there may be Retail Sales, PPI and Initial Claims, which are all very important data points.
Market Wrap-up
The Talking Fed: Fed Chair Powell spoke today at 12:20 PM. You can read his prepared statement here. He offered no guidance on rates but suggested that the balance sheet tightening program (which primarily sold off Treasuries versus MBS) could end soon.
Half Empty: The Sept NFIB Small Business Optimism Index dropped from 100.8 down to 98.8 which was a little below forecasts.
On Deck for Tomorrow: NY Fed Empire Manufacturing Index, Fed Beige Book.