What Happened Last Week?
Modest Incidental Weakness
Despite a bit of incidental selling on Friday, the bond market has survived the winter holiday season without even attempting to break outside the narrow prevailing range. This is especially true for shorter duration Treasuries and MBS. It has been and continues to be the case that experts won’t get a sense of the next wave of momentum until this week at the earliest. It could take even longer if the economic data fails to make a compelling case for better or worse.
Source: Matthew Graham, Mortgage News Daily 1/2/2026)
What’s on the Agenda for This Week?
Overview
The stock market officially starts 2026 today with the first full-strength trading session in 2 weeks.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) Geopolitical, and (3) ISMs.
(1) Jobs, Jobs, Jobs: There is a lot of job and wage related data all week long which culminates with Big Jobs Friday which will be NFP, Unemployment and Average Hourly Earnings.
(2) Geopolitical: A lot of movement over the weekend with geopolitical events. How those unfold for the rest of the week can have a big impact on long bonds.
(3) ISMs: The PMIs and Employment Components of the Manufacturing and Services ISM releases are the most important data points of the week outside the Payroll data.
Market Wrap-up
Rosie the Riveter: December ISM Manufacturing PMI was only 47.9 versus estimates of 48.3. Prices Paid remained at 58.5 and the Employment Index moved from 44.0 to 44.9.
On Deck for Tomorrow: Light day for economic data with only Total Vehicle Sales hitting.