What Happened Last Week?
Decent Gains with Some Help from 7-Year Auction
You know it’s a holiday with an early closure if a 7-year Treasury auction had an impact on the bond market. To be fair, 7s have had an impact once or twice in the past, but the bar is certainly high. The holiday calendar makes the bar a bit lower as fewer determined traders are required to move the whole pile. Such was the case after the 11:30am ET auction on Wednesday. Bonds were already in good shape before that, but the earlier gains were more incidental than data-driven.
Source: Matthew Graham, Mortgage News Daily 12/24/2025)
What’s on the Agenda for This Week?
Overview
This is another holiday-shortened week with many bond traders still on vacation until next Monday.
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are (1) The Talking Fed, (2) Rosie the Riveter and (3) Geopolitical.
(1) The Talking Fed: The Minutes from the last FOMC meeting will be on Tuesday (normally hits on a Wednesday). These Minutes are key as they are from a meeting that released the Economic Projections (dot plot chart), lowered the interest rate and had some dissenting votes.
(2) Rosie the Riveter: Chicago PMI on Tuesday is a pivotal read in the manufacturing sector.
(3) Grab Bag: Big Jobs Friday would normally be this week but it has been pushed to next week so there really isn’t much to digest this week, which means more attention will go to geopolitical events.
Market Wrap-up
Domestic Flavor
Taking it to the House: The November Pending Home Sales Index increased by 3.3% to its highest level in 3 years, beating out estimates of 0.8%.
Rosie the Riveter: The Dallas Fed Manufacturing Survey fell by 10.9 in December following a decrease of 10.4 in November.
On Deck for Tomorrow
Case Shiller YOY Home Prices, FHFA MOM Home Prices, Chicago PMI, FOMC Minutes.