What Happened Last Week?
Oil Impact Ultimately Shunned in Favor of Jobs Report Implications
Friday was a super interesting day for the bond market. Yields rose to the week’s highs overnight as oil prices continued to surge. Experts knew there would be at least some sort of reaction to any big beat/miss in the jobs report and Friday’s miss was certainly big. At first, the reaction was logical. Bond rallied. But the paradox set in quickly and yields hit new highs by 9:30am. Fed funds futures continued arguing for a bond rally, as did lowest S&P levels since November. One could say “bonds finally came to their senses,” or “the initial selling was a quick bout of profit taking,” but no explanation would have been obvious upfront. Since 9:30am marked the shift, it would have to be the vague “positional considerations” and stock market safe haven excuses. Either way, with bonds ending up flat despite oil cracking $90/bbl, it was good enough.
Source: Matthew Graham, Mortgage News Daily 3/6/26)
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) Inflation Nation and (3) Jobs, Jobs, Jobs.
(1) Geopolitical: While geopolitical risk/concern over an ever-expanding campaign in Iran is real, the main focus in the markets is oil prices. Last week started with WTI Crude at $71 and ended the week in the high 80’s. Now, this week start off in triple digits. The higher/longer scenario versus the higher/shorter time period scenario is what the bond market will focus on the most.
(2) Inflation Nation: There will be two key inflationary reads this week with CPI and PCE. PCE won’t hit until Friday though, and the bond market will focus on CORE PCE YOY.
(3) Jobs, Jobs, Jobs: The delayed JOLTS report is this week, along with the weekly dose of Initial Claims.
Treasury Dump
VERY important 30-year auction this week.
- 03/10: 3-year note
- 03/11: 10-year note
- 03/12: 30-year bond
Market Wrap-up
There were no domestic economic events today.
On Deck for Tomorrow: ADP weekly, Existing Home Sales, 3-year note auction.