What Happened Last Week?
Decent Recovery After AM Backtracking
CPI data was a mixed bag for bonds on Friday. Top-line numbers fueled by a quick rally and digestion of the details brought them back to negative territory (albeit with help from stronger S&P PMI data). Bonds found their footing shortly after 10am at just slightly stronger levels and then stayed mostly sideways through the close. Pretty ho-hum CPI day given all the anticipation.
Source: Matthew Graham, Mortgage News Daily 10/24/2025)
What’s on the Agenda for This Week?
Overview
Even though there is a lot of data that is scheduled but will not come out this week, there is a lot going on.
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) Central Bank Palooza.
(1) The Talking Fed: The FOMC’s latest policy statement and interest rate decision will be on Tuesday at 2 pm ET, followed by a live presser with Fed Chair Powell at 2:30 pm. The market widely expects another 25BPS cut at this meeting.
(2) Geopolitical: We enter the week on day 27 of the government shutdown and are just now getting into the period where the majority of federal employees have missed one paycheck. Globally, there have been a few Asian and African trade and/or peace deals completed over the weekend. President Trump is in Japan set to meet with their new PM and then it’s time for the Face-to-Face meeting with China’s Xi.
(3) Central Bank Palooza: Our Fed is not the only game in town as key interest rate decisions will be issued from the Bank of Canada (expected 25BPS cut), European Central Bank (no cut) and Bank of Japan (no cut).
Treasury Dump
- 10/27: 2- and 5-year notes
- 10/28: 7-year note
Market Wrap-up
Rosie the Riveter: The October Dallas Fed Manufacturing Survey remained in negative territory at -5.0 but that is not as bad as September’s level of -8.7.
Treasury Dump: There were two auctions today. The 2-year note saw $69B go off at a high yield of 3.504% and a bid-to-cover ratio of 2.59. The 5-year note was a little better with $70B at 3.625% and a bid-to-cover ratio of 2.38.
On Deck for Tomorrow: Consumer Confidence, Richmond Fed Manufacturing, 7-year note auction, FOMC begins two days of meetings.