What Happened Last Week?
Bonds Almost Able to Break Even Thanks to Tech Turmoil
Tech stocks embarked on a wild ride starting with earnings releases after the bell Thursday. While Friday’s recap title mentioned “breaking even,” if one were to measure Friday’s bond market movement versus Thursday’s 3pm ET levels, 10-year yields were more than 5bps lower. In other words, those earnings releases created a big late-day rally on Thursday and Friday became largely about trying to hold onto the gains. By mid-day, bonds were a bit weaker with 10-year yields approaching 4.96%. Around 12:40pm, news broke regarding Anthropic being unlikely to receive an “investment grade” rating after its IPO. This pushed the NASDAQ even deeper into negative territory and helped bonds make it most of the way back to “unchanged” by 3pm.
Source: Matthew Graham, Mortgage News Daily 10/30/26)
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) Jobs, Jobs, Jobs, (2) Geopolitical and (3) ISMs.
(1) Jobs, Jobs, Jobs: There are tons of job and wage related data all week culminating in Big Jobs Friday with Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings and more.
(2) Geopolitical: How will the bond market react to the mid-terms? If the Republicans lose the House but keep the Senate, then not much will change with things politically for the remainder of Trump’s term. However, if both go to the Democrats then there could be a lot of issues that businesses and bonds must navigate.
(3) ISMs: Both ISM Manufacturing and ISM Services are this week. The bond market will focus on Prices Paid.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: October ISM Manufacturing was stronger than expected, 55.5 versus estimates of 54.6; the Employment Index was fairly level at 52.4 versus 52.7; and Prices Paid remained very high at 75.2 but were below expectations of 77.0.
Bob the Builder: September Construction Spending dropped by -1.9% but that was due to a strong revision to August from 0.9% to 2.0%.
On Deck for Tomorrow
Reserve Bank of Australia Interest Rate Decision, Factory Orders, JOLTS, ***Mid Term Elections***