What Happened Last Week?
Why Bonds Sold Off Despite Weaker Jobs Report
Bottom line, NFP was weaker, but that was the worst of the news. The unrounded unemployment rate barely budged and it would have moved LOWER (under 4.00%) were it not for the uptick in labor force participation. Higher oil prices contributed a bit to intraday weakness as did a recovery in French credit spreads. At the end of the day, this wasn’t the jobs report that sowed any seeds of doubt about cracks showing in the labor market.
Source: Matthew Graham, Mortgage News Daily 10/2/26)
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) ISMs, (2) The Talking Fed and (3) Treasury Dump.
(1) ISMs: The most important economic release of the week is Monday’s ISM Non Manufacturing (services) which accounts for about 2/3 of our entire economic engine. ISM Services PMI was reported at 54.9 versus expectations of 55.0. Bonds will focus on Prices Paid.
(2) The Talking Fed: The Minutes from the last FOMC meeting will be on Wednesday, and there is a ton of talking Feds just about every day this week.
(3) Treasury Dump: A large supply of longer-term debt is going to hit the market this week:
- 10/06: 3-year note
- 10/07: 10-year note
- 10/08: 30-year bond
Market Wrap-up
Check Please: The September ISM Services (non Manufacturing) PMI was as expected, 54.9 versus estimates of 55.0. However, Prices Paid moved higher from 72.6 to 74.0. The Employment Index showed some life by rising from 47.8 to 50.1.
Texas Tea, Black Gold: There was some relief today as WTI is down by $1.80.