What Happened Last Week?
Bonds Continued Drifting Weaker
Nothing new or interesting happened during the course of the trading day on Friday. The key market movers were in place at the start of domestic trading. From an analytical standpoint, the morning commentary adequately recaps the day’s bond market motivations. Yields continued drifting higher throughout the session as investors pulled out of both sides of the market in protest of the apparent extension of the Iran war timeframe. 10s ultimately tapped 4.6% and MBS flirted with a 3/4th point day-over-day drop. In the bigger picture, mortgage rates are doing much better than Treasuries compared to last year’s levels thanks to GSE bond buying.
Source: Matthew Graham, Mortgage News Daily 5/15/26)
What’s on the Agenda for This Week?
Overview
This is a very light week in terms of economic events that can impact pricing.
Three Things
The three areas that have the greatest ability to impact oil prices this week. (1) Geopolitical, (2) The Talking Fed and (3) Early close.
(1) Geopolitical: Once again, this category will continue to dominate long bonds as its impact on inflation/oil prices and more are driving pricing.
(2) The Talking Fed: The Minutes from the last FOMC meeting will be on Wednesday but really this week is about new Fed Chair Warsh taking over.
(3) Early Close: There is a long holiday weekend with the bond market closing early Friday afternoon and will remain closed for Memorial Day and reopen on Tuesday.
Market Wrap-up
Taking it to the House: Home Builder’s Sentiment remains in the basement with a sub-50 reading of only 37.
On Deck for Tomorrow: New Housing Starts and Building Permits, Pending Home Sales Index.