What Happened Last Week?
Logical Pull-Back on Tamer Tariff Talk, But Mortgages Outperform
If there was only one event to be aware of on Friday, it was a Trump comment around 7:10am ET in which The President said that the recently-announced 100% tariff on China was probably not sustainable. Stocks, bond yields, and volumes spiked instantly and nothing much happened for the rest of the day. Fortunately for the bigger picture, Thursday’s mid-day drama caused a big enough bond rally that Friday’s pull-back only managed to erode about half the gains. The news is even better for mortgage rates. Lenders had a big enough cushion from Thursday’s volatility that Friday’s pull-back merely resulted in rates holding steady on average. That means the average lender is fairly close to September’s lows which are close enough to the lowest rates in 3+ years.
Source: Matthew Graham, Mortgage News Daily 10/17/2025)
What’s on the Agenda for This Week?
Overview
This is a very light week for economic data until Friday.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Inflation Nation, (2) Geopolitical and (3) Treasury Dump.
(1) Inflation Nation: The delayed CPI report will be issued on Friday and that will have a huge impact on pricing, however, not until the end of the week. The bond market will be focusing on the Core data, particularly the increases in pricing due to an uptick in services versus goods. And in the goods component, experts look at what increases are due to tariffs and which increases are good old inflation. There will also be the Atlanta Federal Reserve’s Business Inflation Expectations on Wednesday.
(2) Geopolitical: The government is still shut down and even though the Senate will take another whack at a vote, the markets are expecting the government to remain closed for at least this week. China and the U.S. are set to meet for more trade talks.
(3) Treasury Dump: There is an important 20-year Treasury Bond auction Wednesday.
Market Wrap-up
There were no domestic economic releases today due to the government shutdown.
There was a monster rally in the stock market with the DJIA up over 500 points but this had no impact on long bonds/MBS.
On Deck for Tomorrow: No scheduled releases.