What Happened Last Week?
Just a Bit More Selling to End the Week
Nothing much new happened in the bond market Friday and that’s not great because the status quo has been for rising energy prices to push bond yields higher (and stocks lower). The short end of the curve actually improved, but that says more about end-of-week position squaring than any new development. All told, it was the least painful day of the week despite ending at the highest yields since February 4. This week brings a Fed announcement with zero chance of a cut, but still perhaps some interesting commentary on how the Fed will sort inflation implications versus the economic impact.
Source: Matthew Graham, Mortgage News Daily 3/13/26)
What‘s on the Agenda for This Week?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing are: (1) Geopolitical, (2) The Talking Fed and 3) Central Bank Palooza.
(1) Geopolitical: 3 weeks into the Iran conflict, geo political actions/news will continue to drive oil prices which will continue to have an overweighted impact on long bond yields.
(2) The Talking Fed: The Federal Open Market Committee’s Interest Rate Decision and Policy Statement bill be on Wednesday followed by a live presser with Fed Chair Powell. The bond market does not expect any action at this meeting but will be looking for signs via votes for/against the policy statement and comments from Fed Chair on serious concerns over inflation with rising oil prices. The Atlanta Fed Business Inflation Expectations will also be issued.
(3) Central Bank Palooza: Our Fed is not the only Central Bank this week. We hear from at least 6 others which include the European Central Bank, Bank of England, Peoples Bank of China, and Bank of Canada. Their cumulative outlook and policy changes can have an impact on pricing over the week.
Treasury Dump
There is an important 20-year Treasury bond auction on Tuesday.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: Empire Manufacturing was much weaker than expected, -0.2 versus estimates of 3.9. Industrial Production 0.2% and Capacity Utilization 76.3% both matched market expectations.
Taking it to the House: The March NAHB Home Builders Sentiment remained in the basement with a sub-par meeting of 38.
On Deck for Tomorrow
FOMC Meetings begin, Pending Home Sales, Housing Starts and Building Permits, 20Y Treasury bond auction.