What Happened Last Week?
Nothing Else Happened After Initial Selling
The typical early close for the bond market is 2pm ET. This is usually reserved for a holiday-adjacent day such as Christmas Eve or the day after Thanksgiving. Good Friday is unique. On years where it DOES NOT coincide with a jobs report, it’s fully closed. Otherwise, it’s open for a partial day, but only until noon ET instead of 2pm. That didn’t leave much time for anything else to happen Friday morning after the initial bout of moderate selling pressure. It also discouraged trading volume in general–especially in light of other markets being fully closed.
Source: Matthew Graham, Mortgage News Daily 4/3/26)
What‘s on the Agenda for This Week?
Three Things
The three areas that can have the greatest impact on MBS backend pricing this week are (1) Geopolitical, (2) Inflation Nation and (3) Check Please.
(1) Geopolitical: This category will continue to dominate long bond trades. On the radar is a possible truce, higher escalation, the Strait of Hormuz, oil prices, etc.
(2) Inflation Nation: There will be a lot of inflation data this week with PCE and CPI. PCE will get more weight as the Fed’s key measure of inflation; Core PCE will be on Thursday.
(3) Check Please: The ISM Non-Manufacturing PMI (services) kicks off the week. This represents 2/3 of our economic engine. Bond traders will pay close attention to Prices Paid. ISM Services was reported at 54 versus expectations of 55 while Prices Paid rose from 63 to 70.7.
Treasury Dump
This is a big week for longer term Treasuries.
- 04/07: 3-year note
- 04/08: 10-year note
- 04/09: 30-year bond
Market Wrap-up
Check Please: The March ISM Non Manufacturing (services) PMI was 54 versus estimates of 55, so still showing expansion but at a lighter pace. However, the Prices Paid jumped up from 63.0 to 70.7. The Employment Index cratered from 51.8 to 45.2.
On Deck for Tomorrow: ADP Weekly Employment, Durable Goods Orders, 3Y Treasury note auction.