What Happened Last Week?
Bonds Cap Stellar Week/Month with Strongest Close
Bonds ended the week/month at their strongest levels with 10-year yields breaking below the 4.0% floor to close at 3.95+. In addition to the low outright levels, the journey was accomplished with minimal volatility along the way. This is potentially surprising given Friday morning’s much higher PPI numbers, but PPI is notoriously volatile and hasn’t had a noticeable impact since 2024. This week brings the typical early month, big ticket econ data (ISM, ADP, and the jobs report).
Source: Matthew Graham, Mortgage News Daily 2/27/26)
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) Geopolitical, (2) Jobs, Jobs, Jobs, and (3) ISMs.
(1) Geopolitical: Now that the hammer has dropped on Iran (which the bond market was already largely pricing in for 2 weeks), the bond market will focus on oil prices and any change in elevated scope and time of this operation.
(2) Jobs, Jobs, Jobs: The job market has seemingly been stuck in a low hire but low fire trend. Last month’s NFP saw significant revisions downward to the tune of 1 million and made the average for 2025 only 15K jobs per month.
(3) ISMs: ISM Manufacturing was solid last release and is expected to see another expansionary data point. The bond market will be focusing on the PMIs but really looking at Prices Paid.
Market Wrap-up
Rosie the Riveter: The February ISM Manufacturing PMI was a smidge better than expected, 52.4 versus estimates of 51.8, and more importantly marks the second straight month of expansionary readings above 50. However, there is MAJOR Inflationary TROUBLE with Prices Paid shooting up from 59.0 to 70.5! This is very negative for bond yields.
On Deck for Tomorrow: No economic data but there will be speeches from Fed representatives Williams, Schmid, and Kashkari.