What Happened Last Week?
Sideways Overall Despite Hawkish Fed Speakers
Although there was some mid-day volatility on Friday (early buying followed by slower selling back to roughly unchanged territory), that movement was more in line with month-end tradeflows than any interesting, specific motivations. Nonetheless, there were interesting, specific developments in the form of several comments from several Fed speakers. Rather than display a balanced mix of differing viewpoints, Friday’s crop of comments was distinctly hawkish across the board. Logan said she would have preferred to hold rates steady this week and can’t see a case for a December cut. Hammack said it’s not clear what the right answer is for rates, but that it’s important to stay restrictive. Bostic said he was glad Powell said a December cut is far from a foregone conclusion. And Schmid said he dissented in the vote due to economic momentum and inflation concerns. While bonds didn’t react to this Friday, the lopsided hawkishness makes for an interesting 6 weeks of data-watching ahead of the next Fed meeting and dot plot.
Source: Matthew Graham, Mortgage News Daily 10/31/2025)
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) Geopolitical, (2) ISMs and (3) Central Bank Palooza.
(1) Geopolitical: The U.S. government is still shutdown as many expected it to last until the mid-term elections at the very least. And those are Tuesday. Also, the Supreme Court is hearing arguments this week on tariffs.
(2) ISMs: Since there will NOT be any BLS jobs data this week, the private ISM Manufacturing and ISM Services reports will get a lot of attention. Their Employment and Prices Paid indexes will serve as proxies for jobs and inflation reports.
(3) Central Bank Palooza: The Bank of England is the next up for global banks’ Interest Rate Decisions and Policy Statements.
The Talking Fed
This is a busy week for Fed speak now that the media blackout period is over.
- 11/03 Miran, Daly and Cook
- 11/04 Bowman
- 11/06 Barr, Williams and Hammack
- 11/07 Williams, Jefferson and Miran
Market Wrap-up
Rosie the Riveter: The October ISM Manufacturing PMI contracted for the 8th consecutive month (reading below 50) and came in weaker than expected, 48.7 versus estimates of 49.5. Prices Paid dropped from 61.9 down to 58 but 58 is still a very high level. The Employment Index improved from 45.3 to 46.0 but that is still in contractionary territory.
The Talking Fed: Fed Gov Cook said that December is a “live meeting,” with the rate decision dependent on how risks break down between stubborn inflation and a softening labor market.
On Deck for Tomorrow: Reserve Bank of Australia Interest Rate Decision.