Kind of a big week for data with the BLS Jobs on Wednesday and CPI on Friday, We’re expecting the Unemployment Rate to stay at 4.4% and CPI to drop from 2.7% to 2.5%. Bonds should benefit from the news of lower CPI inflation.
The Chinese government has instructed its banks to scale back their purchases of US Bonds, which is interesting because the Chinese government has announced no plans for any cutbacks themselves. But lower demand for our debt will lead to higher rates on future issuances.
Another possible setback on the road to lower interest rates is Alphabet (Google), who a will sell another $15 billion in paper to raise funds for further AI infrastructure. In the bond world, $15B is small potatoes, but anything that waters down the purchasing of MBS reduces the likelihood of lower mortgage rates in the future.
With the 10 Year yield dropping almost 1% between last Thursday and Friday, it would be great to see mortgage rates follow suit–even just a little bit.
