What Happened Last Week?
How Technical Do You Want to Be?
There are always multiple technical lenses through which to view market movement, but the simplest involve trendlines and level lines. Yield movement has largely held inside the same high/low trendlines since October 2025, so that’s a useful trend to keep tabs on the big picture. On a separate note, it’s almost always worthwhile to keep tabs on the most recent long-term highs/lows. The last 2 days of last week saw yields flirt with both of these technical frameworks. Thursday, they broke above the upper trendline and the long-term high. Friday, they recovered under the long-term high but bounced precisely on that long-term trendline. Is the latter a cause for concern? Not technically. In fact, the last time it happened was May 22nd, and rates generally moved lower in the following month. Why did they move lower? The answer has nothing to do with technicals and everything to do with oil prices.
Source: Matthew Graham, Mortgage News Daily 7/24/26)
What’s on the Agenda for This Week?
Overview
This is a very pivotal week.
Three Things
The three areas have the greatest ability to impact MBS backend pricing this week are: (1) Geopolitical, (2) Central Bank Palooza and (3) Inflation Nation.
(1) Geopolitical: After 13 days of military escalation between US and Iran, this week starts off with 3 days of lower activity which has helped cool off oil prices. How long will this “pause” last and will it resolve in an agreement or more military action? This will drive oil prices, gas prices and inflation globally.
(2) Central Bank Palooza: Key interest rate decisions will be issued from the Bank of England, Bank of Japan and the Federal Reserve. Wednesday’s Federal Reserve Interest Rate Decision and Policy Statement will get the most focus. Currently, the long bond market is expected no rate hike, but 1 to 3 dissenting votes that do want a hike.
(3) Inflation Nation: Just one day after the big Fed meeting, they will issue their preferred measure of inflation, Core PCE, which is from a time period where oil and gas prices were lower than they have been recently, and the readings are expected to be quite mild.
Market Wrap-up
Rosie the Riveter: June Headline Durable Goods were lighter than expected, 0.3% versus estimates of 1.7%; Ex Transportation, it was up 0.6% versus estimates of 1.0%. Core Capital Goods matched expectations of 0.9%. July Dallas Fed Manufacturing jumped from 0.0% to 1.3%.
Treasury Dump: There were two auctions today. The 2-year note saw $69B go off at 4.315% with a bid-to-cover ratio of 2.66. The 5-year note saw $70B go off at 4.408% with a bid-to-cover ratio 2.28.
On Deck for Tomorrow: Consumer Confidence, Richmond Fed Manufacturing, Case Shiller, FHFA Housing Price Index, FOMC begins two days of meetings.