What Happened Last Week?
Slightly Weaker Drift, But Broadly Uneventful
Friday may as well have been a 4th weekend day for the bond market. Volume and liquidity were obviously in holiday mode. Trading levels were basically flat, although it might not feel that way if MBS prices end the day down more than an eighth of a point. It’s unclear whether there was actual weakness at the end of the day or an incidental expression of extremely thin liquidity. Even if it’s “real,” it’s still not bad considering where the market was on Tuesday afternoon.
Source: Matthew Graham, Mortgage News Daily 1/17/2025)
What’s on the Agenda for Week?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Trump 2.0, (2) Davos Baby, (3) Central Bank Palooza.
(1) Trump 2.0: It’s finally here, the 2nd Trump area began Monday. The global markets will be extremely sensitive to the barrage of initial Executive Orders this week as well as tariffs, taxes, DOGE, regulations, budget, debt ceilings, the border and much more.
(2) Davos, Baby! This week is the World Economic Forum held in Davos, Switzerland. It has a much different tone this year.
(3) Central Bank Palooza: Key interest rate decisions will be issued from the People’s Bank of China and the Bank of Japan.
Market Wrap-up
Domestic Flavor
There were no domestic economic events today.
On Deck for Tomorrow
Weekly Mortgage Applications, Atlanta Fed Business Inflation Expectations, Leading Economic Indicators, 20-year Treasury Bond auction.