What Happened Last Week?
Tariff Ruling Tried (and Failed) to Steal the Show
If you were told ahead of time that Friday morning would bring news that the Supreme Court struck down the IEEPA tariffs, you wouldn’t be crazy to think it would be the week’s biggest news and a big potential source of volatility for bonds. But reality wasn’t quite as dramatic. It’s true that the tariff ruling garnered the week’s highest volume as well as some elevated directional volatility, but in outright terms, it was less than 3bps in 10-year yields and about half of that was recovered as the day progressed.
Source: Matthew Graham, Mortgage News Daily 2/20/26)
What‘s on the Agenda for This Week?
Overview
What are expectations for economic growth and inflation for the 2nd half of the year?
Three Things
These are the three areas that have the greatest ability to impact MBS backend pricing this week. (1) Geopolitical, (2) Rosie the Riveter and (3) The Consumer.
(1) Geopolitical: The bond market will be taking a 30,000-mile-high view of the new tariff entanglement, the President’s State of the Union address, and probable Iran military action.
(2) Rosie the Riveter: Has manufacturing actually turned the corner? After more than 3 years of contraction in the manufacturing base, there has been a recent run of expansionary manufacturing data. This week will be Chicago PMI, Factory Orders, Richmond Fed and Dallas Fed.
(3) Consumer Confidence: Tuesday will be key. It is expected to rise to 88.0; readings above 90 can be negative for pricing.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: There was a mixed bag of manufacturing data today with the Feb Dallas Federal Reserve Manufacturing Survey flipping from -1.2 to +0.2 but the December Factory Orders data flipped from +2.7% down to -0.7%.
Report Card: The National Activity Index put out by the Chicago Federal Reserve showed a nice move from -0.21 in December to +0.18 in January.
On Deck for Tomorrow
PBOC Interest Rate Decision, Consumer Confidence, Case Shiller, FHFA Housing Price Index, Richmond Fed Manufacturing, 2YR Note Auction, President Trump’s speech.