What Happened Last Week?
Global Bond Market in Reprice Mode
Around the bond market, “reprice” typically refers to mid-day rate changes from mortgage lenders, but infrequently, a big picture repricing occurs. That’s what’s going on in March and especially over the last 2.5 days. Wednesday’s Fed comments and Thursday’s ECB/BOE comments confirmed that there’s a floor under short term rates for a vast majority of the planet’s reserve currency holdings, AND that hikes are quickly replacing cuts as the next likely move (September Fed meeting went from 0% hike chance to more than 25% in less than 2 days). Trading and investment strategies of a majority of the world’s investible capital was positioned for an entirely different reality before the Iran war. Now it is repositioning… repricing for new realities.
Source: Matthew Graham, Mortgage News Daily 3/20/26)
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 (duh), (2) Jobs, Jobs, Jobs and (3) Treasury Dump.
1) Geopolitical: Everything you need to know about how the long bond market (particularly MBS) have reacted to the war in Iran is that it is down over 200 BPS since it started. The inflation, job and other data have taken a back seat to rising oil prices. This week will be no different.
(2) Jobs, Jobs, Jobs: The ADP 4-week rolling average and Initial Weekly Jobless Claims will be this week.
(3) Treasury Dump: There will be a round of shorter-term notes hitting the market with 2-, 5- and 7-year note auctions.