What Happened Last Week?
Potential Signs of Government-Sponsored Enterprises (GSEs) Buying as MBS Outperform
Friday was an uneventful day when it comes to scheduled data/events, and also pretty boring for the bond market in general. Most of the market’s volatility continues playing out in stocks, commodities, crypto, etc. The most notable development was the MBS outperformance. Specifically, MBS were up about 2 ticks (.06) in price in the 2pm hour while 5- and 10-year Treasuries were down at least 6 ticks (.19) in price. Some of the Treasury weakness could be viewed as an artificial byproduct of Thursday afternoon’s Treasury-specific late-day rally, but even with factoring that out, MBS are still outperforming. With no official buying schedule/report from GSEs, such instances of outperformance are some of the only clues as to MBS purchases taking place. This doesn’t matter for any particular reason, but it addresses a frequently asked question.
Source: Matthew Graham, Mortgage News Daily 2/6/26)
What’s on the Agenda for This Week?
Overview
What it will take to finally break out of this well-defined trading channel?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) Inflation Nation and (3) Retail Sales.
(1) Jobs, Jobs, Jobs: Big Jobs Wednesday is this week with the delayed data from last week. The overall job picture last week was one of labor softening. The bond market will be focusing on the massive expected revisions to the prior data just as much as the current round of NFP.
(2) Inflation Nation: The Delayed CPI report will hit Friday and the bond market will be very sensitive to any increase in the MOM and YOY trends.
(3) Retail Sales: The top of the Food Pyramid for economic data. Here is where the rubber meets the road: does the recent consumer “survey” data from UofM and the Conference Board correlate into weak Retail Sales or does there continue to be very little correlation between what consumers say and what they do?
Treasury Dump
Here is this week’s Treasury auction schedule:
- 02/10: 3-year note
- 02/12: 30-year bond
Market Wrap-up
There were no economic releases today.
On Deck for Tomorrow: Retail Sales, Employment Cost Index, ADP Weekly, 3-year note auction, Import and Export Prices.