What Happened Last Week?
Slightly Weaker, but Much Stronger on the Week
Friday was calm and sideways in the bigger picture. Sure, a 4+ bp increase in 10-year yields and an MBS decline of just over an eighth of a point might sound somewhat unpleasant on the average day, but considering there was 4 times as much movement in the other, friendlier direction Thursday, experts are not bothered. Rationale was rational to boot. The NASDAQ drifted sideways to slightly higher and nittier grittier canaries like Coreweave. Bond yields bounced back slightly lower as well. Overall, Friday did nothing to change the big picture. It is still to be seen if tech sentiment gets back on track or continues to deteriorate. It won’t be able to equivocate for long.
Source: Matthew Graham, Mortgage News Daily 10/23/26)
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) The Talking Fed, (2) Inflation Nation and (3) Central Bank Palooza.
(1) The Talking Fed: The FOMC Interest Rate Decision and Policy Statement will be on Wednesday, along with a live presser with Fed Chair Warsh. This is NOT a meeting where they give their Economic Projections/Dot Plot.
(2) Inflation Nation: The Fed’s key measure of inflation, PCE, will be on Thursday – one day after their meeting.
(3) Central Bank Palooza: Our Fed is not the only game in town, as there will be key interest rate decisions out of the Bank of Canada, ECB and the Bank of Japan.
Market Wrap-up
Rosie the Riveter: The October Dallas Fed Manufacturing Index shot up to 13.1 versus estimates of 7.0.
Treasury Dump: Three days of dumping debt into the marketplace kicked off with today’s 2-year note auction. $69B went off at a high yield of 4.708% and a bid-to-cover ratio of 2.59.
On Deck for Tomorrow: ADP, Durable Goods Orders, Home Price Index, Consumer Confidence, New Home Sales, Richmond Fed Mfg, 5-year note auction, FOMC starts two days of meetings.