What Happened Last Week?
Small Scale Weakness Leaves Bigger Picture Unchanged
Bonds began Friday in stronger territory after tracing a risk-off move in the overnight session. Much like Thursday, 9:30am brought a momentum reversal, both for stocks and bonds, thus beginning a slow march back into weaker territory. Bonds might have stayed green if not for tariff headlines at noon ET which resulted in a modest nudge for stock prices and bond yields simultaneously (probably…it was so small that it could easily be seen as noise). Either way, the bigger picture was completely unaffected. Bonds are sideways near their strongest levels in months while they wait for guidance from data on the next big move.
Source: Matthew Graham, Mortgage News Daily 3/21/2025)
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) Inflation Nation, (2) The Consumer and (3) Geopolitical.
(1) Inflation Nation: The main inflation gauge will be on Friday with headline and core PCE. The bond market will be very sensitive to the YOY readings.
(2) The Consumer: Two key readings on the state of the consumer are this week with the most weight going to Tuesday’s Conference Board’s Consumer Confidence Index. Friday’s UofM’s Consumer Sentiment has already been released once this week and experts will focus on the revisions to the final number.
(3) Geopolitical: April 2 is fast approaching and the bond market will hedge based upon rhetoric out of the White House leading up to the day.
Treasury Dump
Here is this week’s Treasury auction schedule.
- 03/25: 2-year note
- 03/26: 5-year note
- 03/27: 7-year note
Market Wrap-up
Domestic Flavor
Report Card: The February Chicago Fed’s National Activity Index actually cracked into positive territory, moving from -0.3 to +0.18.
Flashed: The Markit S&P “flash” PMIs showed Manufacturing contracting by falling from 51.6 to 49.8 and Services PMI expanding by increasing from 49.7 to 54.3.
On Deck for Tomorrow
Case Shiller HPI, FHA HPI, New Home Sales, Consumer Confidence, Richmond Fed Manufacturing, 2-year Treasury Note auction.