This Week's Capital Markets Update

This week's capital markets update...

- Last week closed with buying in the bond market, largely due to geopolitical concerns after Iran’s top nuclear scientist was assassinated

- Longer-term treasuries, in particular, were supported by discussion in Wednesday’s FOMC minutes about possibly shifting more QE purchases to the longer-end of the curve.

- By the close on Friday, Treasuries had rallied and the MBS basis ended tighter.

- November gross issuance totaled a record $354.1 billion, up 4.9% from the previous month’s high of $337.4 billion. 43% was in FNMA, 37% was in FHLMC, and 20% was in GNMA.

- This week’s economic calendar gets underway shortly with Chicago PMI for November and Pending Home Sales for October.

- The only other release scheduled is Dallas Fed Texas manufacturing for November.

- There is no Fedspeak scheduled today, but Chair Powell and Treasury Secretary Mnuchin will testify before the Senate Banking Committee tomorrow and the House Financial Services Committee on Wednesday.

- Other economic updates scheduled this week include November ISM manufacturing and October construction spending tomorrow, November ADP employment on Wednesday, November Challenger job cuts and November ISM manufacturing on Thursday, and October factory orders and the closely watched November Payrolls report on Friday.

We begin the week with Agency MBS prices unchanged from Friday and the 10-year yielding .86 after closing Friday at 0.84%.

Market commentary by Rob Chrisman.