To say “next week might be different” is of questionable value when it comes to financial markets. Every week could be different! However, some are more at risk of volatility than others. Risk was moderate this week but has subsided after the Fed announced. Next week is a little more momentous. Not only does it bring the biggest economic data of the month, but it is also an important week for tracking Covid data as we are in the current wave. Cases should continue to mount, and that should continue to isolate bonds from strong selling, but the current rally is showing signs of maturity nonetheless.

Economic data / events

  • Fed MBS purchases 10 a.m., 11:30 a.m., 1 p.m.

  • Core PCE Inflation 3.5 vs 3.7 f’cast, 3.4 prev

  • Chicago PMI 73.4 vs 64.6 f’cast, 66.1 back

  • Consumer sentiment 81.2 vs 80.8 f’cast
    Inflation expectations DROP 0.1%

Summary of the market movement

09:05 am

More often overnight, mostly during the Asian hours. Slight extension of profits according to PCE data, then a small jump. Yields are still 2 basis points lower that day and MBS is up an eighth.

12:43 pm

Small rally in Treasuries just after 10am (looks more like trade flows than data … MBS didn’t follow). Otherwise mostly flat. 10 year yields fell 3.5 basis points to 1.231 and MBS rose an eighth.

3:53 p.m.

Not a big change from the last update, or not at all. The end of the month was not an event despite the typical volume spike at 3 p.m. ET. Lowest weekly and monthly closing returns since January.