What Happened Last Week?
Early Gains. Flat Afternoon. MBS Underperform.
Friday ended up offering a boring conclusion to a week that had at least some measure of excitement on Wednesday. Bonds started a hair stronger, lost ground modestly and then rallied to the day’s best levels by noon. From there, 10-year yields went perfectly sideways in an ultra-narrow range. MBS managed to hang on to just barely positive levels but gave up about an eighth of a point during the time Treasuries were holding steady. Technically, this is underperformance in a vacuum, but in the bigger picture, MBS have been doing just fine in relative terms.
Source: Matthew Graham, Mortgage News Daily 6/26/26)
What’s on the Agenda for This Week?
Overview
This is a holiday shortened week with an early close on Thursday and complete close on Friday
Three Things
The three areas that have the greatest ability to impact MBS backend pricing are: (1) Geopolitical, (2) Jobs, Jobs, Jobs and (3) Domestic Flavor.
(1) Geopolitical: After a weekend of military escalation, the MOU is hanging on by a thread. WTI Crude dropped below $70 a couple of times last week. More military escalation could cause a reversal in that trend which will pressure MBS pricing.
(2) Jobs, Jobs, Jobs: Big Jobs Friday has been moved to Thursday during the holiday-shortened week. There will be a ton of wage and job related data in a compressed time frame as a result. The bond market will be sensitive to gains in wages and jobs.
(3) Domestic Flavor: There will be several tier 1 economic releases that have the gravitas to move pricing. These include Consumer Confidence, ISM Manufacturing and Chicago PMI.
Market Wrap-up
Rosie the Riveter: The June Dallas Fed Manufacturing Survey dropped from 0.4 down to 0.0.
Texas Tea, Black Gold: WTI Oil remained low but did move up slightly to $70.64.
On Deck for Tomorrow: Case Shipper HPI, FHFA House Price Index, Chicago PMI, Consumer Confidence, JOLTS.