What Happened Last Week?
Weaker Conclusion but No Major Big Picture Implications
Despite much stronger revisions and a modestly stronger core retail sales number Friday morning, bonds managed to hold mostly sideways until the afternoon hours. At that point, lighter summertime Friday afternoon trading gave way to a mini snowball that took yields to their highest levels of the week. Fed Funds futures suggested some thought behind the selling with the highest implied September rate since just before Tuesday’s CPI. All that having been said, bonds could simply be hedging their optimism ahead of this week’s Jackson Hole speech from Fed Chair Powell. In the bigger picture, little has changed since the previous Friday’s jobs report.
Source: Matthew Graham, Mortgage News Daily 8/15/2025)
What’s on the Agenda for This Week?
Overview
This is a big week for the Fed and geopolitical but not so much on the economic side.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) The Talking Fed, (2) Geopolitical and (3) Domestic Flavor.
(1) The Talking Fed: This week is the Jackson Hole Economic Symposium. Every single member of the FOMC will speak this week, including Fed Chair Powell at the end of the week to close out the symposium. And the Minutes from the last FOMC meeting will be issued on Wednesday.
(2) Geopolitical: The financial markets are watching to see what happens with Trump/Zelensky today and what (if anything) can be worked out with Russia after last week’s meeting with Trump/Putin.
(3) Domestic Flavor: This is a very light week for meaningful economic data. There is a lot of housing news but that is not something that will move the needle on pricing. The 20-year Treasury bond auction is the most significant calendar event.
Market Wrap-up
Bob the Builder: Home Builder’s Sentiment dropped in August from an already anemic 33 down to 32.
On Deck for Tomorrow: Housing Starts and Building Permits.