What Happened Last Week?
Mortgage Rates Just Off 2-Week Lows
Friday ended up being a fairly uneventful day for mortgage rates despite scattered speculation about the impact of foreign monetary policy decisions. The average lender nudged just a hair higher, resulting in the second lowest reading of the week. Apart from Thursday, the last day with lower rates was more than 2 weeks ago on December 4th.
Source: Matthew Graham, Mortgage News Daily 12/19/2025)
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) Report Card, (2) Jobs, Jobs, Jobs, (3) Glass Half Full.
(1) Report Card: The 3rd quarter GDP will be on Tuesday. It is expected to move up to 3.2% which is above that “sweet spot” of 2 to 2.5 that is bond friendly. The higher above 3.0 that this reading is, the worse it will be for pricing.
(2) Jobs, Jobs, Jobs: The weekly ADP release will be issued as well as Initial Weekly Jobless Claims. The bond market is still trying to handicap the job sector with conflicting data sets.
(3) Glass Half Full: The Conference Board’s December Consumer Confidence Index will hit on Tuesday. Markets will be sensitive to the index reading (estimated to be 91.9) as well as the 12-month inflation outlook.
Treasury Dump
We have a round of shorter-term notes that will hit this week:
- 12/22: 2-year Note
- 12/23: 5-year Note
- 12/24: 7-year Note
Market Wrap-up
Report Card: The Chicago Fed National Activity Index for November was down 0.21.
Treasury Dump: Three days of dumping our debt into the marketplace kicked off with today’s 2-year note. $69B went off at a high yield of 3.499% and a bid-to-cover ratio of 2.54 and saw the lowest foreign demand since 2023.
On Deck for Tomorrow: Durable Goods, GDP, ADP, Consumer Confidence, Industrial Production and Capacity Utilization, Richmond Fed Manufacturing Index, 5-year Note.