What Happened Last Week?
Jackson Hole Speech Delivers
Powell’s Jackson Hole speech was this week’s only big ticket in terms of market movement potential and it definitely delivered. Powell hasn’t heard from since 2 days before infamous August 1st jobs report. His tone logically pivoted to place incrementally more focus on the Fed’s full employment mandate while repeating that the base case is for tariff-driven inflation to be–well–transitory. Combine that with his reminder that policy rates are still in restrictive territory and the takeaway was a subtle but obvious openness to consider a September cut. Traders were surprisingly surprised by this, thus making for a decent little rally in bonds. Gains arrived swiftly and hung out uneventfully through the close.
Source: Matthew Graham, Mortgage News Daily 8/22/2025)
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 Talking Fed and (3) Domestic Flavor.
(1) Inflation Nation: The Fed’s actual measure of inflation will be on Friday with PCE and Core PCE, with the MOM change in Core getting the most weight. Last report it rose by 0.2% and it is expected to rise by 0.3% this time around which would not be positive for MBS pricing.
(2) The Talking Fed: Now that Fed Chair Powell has opened the door for a September rate cut and perhaps a cycle of slow and steady cuts, experts will be paying close attention to this week’s speakers.
- 08/25: Logan, Williams
- 08/26: Barkin
- 08/27: Barkin
- 08/28: Balance Sheet, Waller
(3) Domestic Flavor: The releases that will get the most weight by bond traders will be Consumer Confidence and revisions to GDP. The 2nd tier goes to the PMIs, Durable Goods and Consumer Sentiment and the 3rd tier goes to Initial Claims.
Treasury Dump
Here is this week’s Treasury auction schedule.
- 08/26: 2-year note
- 08/27: 5-year note
- 08/28: 7-year note
Market Wrap-up
Domestic Flavor
Report Card: The July Chicago Federal Reserve’s National Economic Activity Index fell from -0.18 in June to -0.19 (trending in the wrong direction).
Rosie the Riveter: The Dallas Fed Manufacturing Survey showed problems in Texas as Activity dropped from 0.9 in July down to -1.8 in August.
Taking it to the House: July New Home Sales were better than expected, 652K versus estimates of 628K but the concern is that home builders reported using sales incentives more and more. In fact, it reached a post pandemic high of 66%.
On Deck for Tomorrow
Durable Goods Orders, Consumer Confidence, Case Shiller HPI, FHFA HPI, Richmond Fed Mfg, 2-year note auction.