What Happened Last Week?
At Least It Didn’t Get Much Worse After the Initial Rout
If there was something reassuring to say about the bond market Friday, it would be that there wasn’t much selling after 9am ET. Unfortunately, there was a whole lot of selling in the prior 30 minutes. Try as they might, analysts couldn’t find any obvious holes in the strong picture painted by the jobs report. Stocks got completely destroyed as well–evidence of the jump in Fed rate hike expectations adding to a tech correction that was already underway. An Iran war peace deal remains the biggest market moving prospect on the horizon, but traders will be a bit more interested in labor market data going forward.
Source: Matthew Graham, Mortgage News Daily 6/5/26)
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) Central Bank Palooza.
(1) Geopolitical: After a very active weekend with military action from multiple sides, a cautious cease-fire remains in place. Long bond yields will continue to react to spikes or drops in oil prices.
(2) Inflation Nation: Both CPI and PPI will be this week, with the most weight on Core CPI which is expected to rise by 0.3%. A reading over that would be negative for pricing.
(3) Central Bank Palooza: Key interest rate decisions will be issued from the Bank of Canada and the European Central Bank with the ECB expected to raise their rate by 25BPS.
Treasury Dump
Here is this week’s auction schedule:
- 06/09: 3-year note
- 06/10: 10-year note
- 06/11: 30-year bond
Market Wrap-up
Inflation Nation: The New York Federal Reserve’s monthly survey of Consumer Expectations showed a decrease in 1-Year Inflation Expectations from 3.64% down to 3.46% and the 3-Year remained at 3.1%.
On Deck for Tomorrow: ADP Weekly Employment, Trade Balance, Existing Home Sales, 3YR Treasury note auction.