[Matt] This is Matt Graham with the MBS Live Market Update. Last week was obviously punctuated by the holiday closures for the bond market with Thursday being fully closed and Friday half day generally regarded as another market closure day. There was no significant economic data or a calendar events that drove the gains. Although we did see some additional gains on Friday and we saw strong gains on Monday to start the new week. on the announcement of Scott Beason as treasury secretary, some momentum for that trade continued into the middle of the week, but by and large, it was a uneventful and uneventful week. Even though there were things like that minutes on the calendar, as well as PCE inflation, which is the feds preferred way to measure progress toward the 2% inflation target. But that didn't do anything to surprise in any major way and that could be part of the reason that we didn't see a big reaction, but there were also more compelling trading motivations in play from things like month end and general positions squaring ahead of a three day or a four day holiday weekend. All in all, bonds rallied back down to the 4.2% range in terms of 10 year treasury yields after being over 4.1% or at the end of the previous week. So, a nice little pickup and if you had to attribute it to anything, it would be the Beason treasury secretary announcement heading into the current week. It is highly consequential in terms of economic data. This is the one that we wait for month in and month out because it has the big jobs report on Friday. In addition to the jobs report, there are also several strong supporting actors in the realm of economic data. We had the first one this morning, didn't make a big dent, but that was ISM Manufacturing came out roughly in line with expectations, but the prices paid component dropped to 50.3 versus a 55.2 forecast. So, a good way to start the week in terms of inflation implications. Tomorrow, we have jolts, the job openings and labor turnover survey, relatively strong market mover over the past few years, but maybe diminishing somewhat over the past few months and on Wednesday, S& P Global's services PMI is the first major piece of data, unless you want to count ADP jobs, which is an on again, off again, market mover, depending on how far it falls from forecasts. When ADP comes in significantly below forecast, it causes the market to speculate that the non-farm payrolls may do the same two days later. But there is historically a fairly poor degree of correlation on any given month, even though there is broader correlation over the long term. Later that morning, ISM non manufacturing is probably the biggest data of Wednesday and then we get a little bit of a break from the big ticket data on Thursday with just the jobless claims, weekly jobless claims, filling the role of the biggest potential market mover. Then, of course, Friday is jobs report day. The forecast is calling for 195,000 jobs created and unemployment rate taking up to 4.2 from 4.1 previously. This is an important one because there has been a bit of back and forth in labor market numbers from this specific report over the past three to four months, where some reports have sharply revised previous numbers and have come in significantly below and above expectations, making for a bit of back and forth momentum. In labor market sentiment and the market's reaction to that. This one stands a chance to clear up some of that, and it will go a long way toward informing the Fed's rate cut or rate pause decision in a couple of weeks in the December Fed meeting. It will also go a long way to help shape the dot plot, which will be heavily traded at that Fed meeting. That's going to do it for today. Back to you.
Matt Graham, Founder and CEO, MBS Live
Matt began as an originator in 2002. He fell in love with the idea of following MBS in real-time but felt that existing products were only scratching the surface. Thus was born MBS Live in 2007, the first-of-its-kind platform with real-time market data/analysis, and live chat with analysts, traders, and originators around the country. He is currently the Founder and CEO of MBSLive!
He's been covering bond/mortgage markets, writing commentary, alerts, and chatting with the live community every business hour of every business day ever since.
Matt also serves as the Chief of Operations for mortgagenewsdaily.com, where he is one of the industry's most respected mortgage rate experts, frequently quoted in the media. Mortgage News Daily's rate index is used as the definitive resource on day-to-day mortgage rate averages.
He lives in the Pacific Northwest with his wife and son where he enjoys skiing, fishing, coaching youth sports, playing the guitar, and more DIY projects/hobbies than he'd care to admit.