What Happened Last Week?
Eerily Calm and Strong for Two Straight Days
After being heavily conditioned to expect elevated volatility with unpredictable timing, the Thursday’s and Friday’s trading sessions were tremendous departures from the norm. Both days featured linear, reasonably big improvements without any singular flashpoints that deserve any more credit than a general sense of cooler heads prevailing on the policy-making front. Indeed, when the week ended with Trump saying “we will be reasonable on tariffs” as opposed to doubling down on triple digit brinksmanship, something has certainly changed and both sides of the market are looking relieved.
Source: Matthew Graham, Mortgage News Daily 4/25/2025)
What’s on the Agenda for This Week?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing are: (1) Tariffic, (2) Inflation Nation, and (3) Jobs, Jobs, Jobs.
(1) Tariffic: Tariffs, the main driving force in pricing this month, is still here and can still cause a lot of volatility.
(2) Inflation Nation: The Fed’s key measure of inflation, Core PCE, will hit on Wednesday. The bond market will be very sensitive to this reading. If it’s high, it’s very negative for bonds. If it’s lower than expected, it could give the Fed cover to cut rates.
(3) Jobs, Jobs, Jobs: It will be Big Jobs Friday, and starting on Tuesday will be a daily barrage of job and wage related data each day culminating in the BLS release on Friday with Non Farm payrolls, Unemployment Rate, Average Hourly Earnings and more.
Central Bank Palooza
The Bank of Japan will issue their interest rate decision on Thursday.Market Wrap-up
Domestic Flavor
Rosie the Riveter: Recession alarm bells sounded with the April Dallas Fed Manufacturing Service Index, which cratered down to -35.8.
On Deck for Tomorrow: Consumer Confidence, Case Shiller HPI, FHFA HPI, JOLTS.