What Happened Last Week?
Volatility Eludes Bonds
Bonds saw some steady selling pressure earlier in the week, but with the total damage amounting to an average of 2bps per day in 10-year yields, it was anything but volatile. The past 2 trading sessions had more noticeable ups and downs, but they played out in an even narrower range. Friday, specifically, was woefully range-bound with 10-year yields essentially in a 2bp range all day. Balmy PPI data and Fed Chair decisions and historic volatility in certain commodities didn’t make any difference. Even the 3pm ET month-end trading barely registered a response despite the typical surge in volume (by far the highest minutes of volume of every month). This week brings the big-ticket economic data and thus a chance for some legit data driven volatility.
Source: Matthew Graham, Mortgage News Daily 1/30/26)
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) Jobs, Jobs, Jobs, (2) ISMs and (3) Geopolitical.
(1) Jobs, Jobs, Jobs: There will be a ton of wage and job related data all week long, culminating in Big Jobs Friday, with NFP, Unemployment Rate and Average Hourly Earnings.
(2) ISMs: Both ISM Manufacturing and Services will be this week. These non-government issued reports will get a lot of weight by the bond market. Their Inflation (prices paid) and Employment components will be very important.
(3) Geopolitical: Here we go again, another government shutdown. The length and severity will have more of an impact on bonds as it drags on. Experts are also watching Iran, Ukraine/Russia and our Supreme Court.
Market Wrap-up
Rosie the Riveter: Is Manufacturing back? After last week’s big surge in the Chicago PMI, there was another big beat with the January ISM Manufacturing PMI which broke back above 50 with a reading of 52.6. Prices Paid remained high and increased from 58.5 to 59.0. The Employment Index did improve from 44.9 to 48.1.
Geopolitical: The government shutdown has caused the BLS to postpone this week’s JOLTS and Big Jobs Friday, making the private sector reports more important this week.
On Deck for Tomorrow: JOLTS? Motor Vehicle Sales.