What Happened Last Week?
Holiday Week Volatility With Zero Consequence
Although there was a brief negative reaction to Wednesday morning’s economic data, the impact was minimal. Random holiday-week volatility accounted for bigger swings, but those swings ultimately canceled each other out. By the 3pm close, bonds were close enough to unchanged levels. That makes Wednesday truly forgettable in the bigger picture. Trading doesn’t get real/serious again until December.
Source: Matthew Graham, Mortgage News Daily 11/26/2025)
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) ISMs and (3) Jobs, Jobs, Jobs.
(1) Inflation Nation: The very delayed PCE report will be on Friday which is the Fed’s official measure of inflation just days before their December meeting. The higher this report is, the worse it is for pricing and vice-versa.
(2) ISMs: These have been a very consistent data set that was not impacted by the government shutdown. Manufacturing is expected to remain in contractionary territory while Services are expected to remain in expansionary territory. Bond traders will focus on Prices Paid and Employment components.
(3) Jobs, Jobs, Jobs: Normally, the BLS Non Farm Payroll report would be on Friday but it will be delayed until after the FOMC meeting. However, there is still all the normal jobs data that leads up to the BLS, including Challenger Job Cuts, ADP and Initial Claims.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: November ISM Manufacturing was close to expectations 48.2 versus estimates of 48.6. However, Prices Paid increased from 58.0 to 58.5 which the long bond market did not like. The Employment Index dropped from 46 to 44 in yet another weak data point for the labor market.
On Deck for Tomorrow: Total Vehicle Sales.