What Happened Last Week?
Technicals Help Reconcile Selling Pressure
In the realm of market commentary, technicals are a vastly overused explanation for past movement, let alone for the prediction of future movement. In this week’s case, however, the consolidation pattern in bond yields offers one of the only ways to understand the otherwise inexplicable selling pressure. Long story short, the weakness was just the right size and pace to complete the pattern heading into events with more power to inspire definitive reactions and lasting momentum.
Source: Matthew Graham, Mortgage News Daily 12/5/2025)
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) The Talking Fed, (2) Jobs, Jobs, Jobs and (3) Treasury Dump.
(1) The Talking Fed: The FOMC Interest Rate Decision and Policy Statement will be on Wednesday at 2 pm ET. The bond market is assuming that there will be a 25 BPS cut. The focus will actually be on their Economic Projections (dot plot chart). The bond market will be very sensitive to changes that signal either more or fewer cuts in 2026 compared to the prior release.
(2) Jobs, Jobs, Jobs: Each jobs release is very important given that there was no BLS release last Friday. This week will be ADP, JOLTS and Continuing Claims.
(3) Treasury Dump: This is a big week for longer-term Treasuries that will hit the market. Wednesday’s 30-year bond auction is the most important.
- 12/08: 3-year note
- 12/09: 10-year note
- 12/10: 30-year bond
Market Wrap-up
Inflation Nation: The Survey of Consumer Expectations from the Federal Reserve Bank of New York showed 1 year inflation expectations fall from 3.24% to 3.20% and 3- to 5-year inflation expectations remained at 3.00%. So here is a summary of inflation expectations surveys for 1 year out:
- Atlanta Fed Business Inflations 2.20%.
- NY Fed Consumer Expectations 3.20%.
- Conference Board’s Consumer Confidence 4.8%.
- UofM Consumer Sentiment 4.1%.
Treasury Dump: Three days of dumping debt into the marketplace kicked off with the shorter-term 3-year note which saw strong foreign demand. $58B went off at a high yield of 3.614% and a bid-to-cover ratio of 2.64.