Friday afternoon’s memorandum on tariff exclusions set the stage for stronger trading in stocks and bonds in the overnight session. Bonds rallied steadily in Asia/Europe and have continued to improve in early domestic trading. Data is nearly non-existent today, with only the relatively obscure NY Fed Consumer Survey on tap at 11am ET. Several Fed speakers will be making the rounds shortly thereafter, but two of the four speeches occur after market hours. Moreover, most Fed speakers have been singing similar tunes recently (tariffs could cause more inflation than previously thought, policy is well-positioned to respond, no rush to change until uncertainty is cleared up).

In a sign of how Treasuries’ status as a global haven during times of turmoil may be fading, rates on longer-term debt soared last week as equities convulsed, turbocharging bets on a steeper yield curve.

The Consumer Financial Protection Bureau said it will not enforce or supervise nonbank financial firms that miss upcoming compliance deadlines for the nonbank registry of repeat offenders.

A bill being introduced by Sen. Catherine Cortez Masto, D-Nev., would compel the Federal Home Loan Bank System to contribute 30%, or a minimum of $200 million, of each bank’s net earnings into affordable housing or other community development programs.

President Donald Trump unleashes an all-out assault on global trade, the status of Treasury bonds as the world’s safe haven is increasingly coming into question.

A version of the Neighborhood Homes Investment Act has been introduced in three prior sessions of Congress, but has never made it through the process.

The Consumer Financial Protection Bureau had accused the Dallas bank of “deliberately disconnecting 24 million customer service calls” among other “unfair” acts. But the motion to dismiss allows the CFPB to refile the case again.

The Federal Housing Finance Agency ended comments on expanded suspended counterparties list criteria in December and has done nothing with it since.

Rough Week For Bonds. No Help From Friendly Data

Bonds managed to recover modestly after the initial yield spike in the morning hours, but nonetheless earned the honor of seeing the biggest week over week jump in 10yr yields since 1981 (note: some outlets are saying 2001 or 1987, but we’re not seeing that, and it doesn’t really matter.  It was a rough week, is the point). Looked at as a 2 week time frame, and it was on par with many other recent examples of moderately brisk selling.  That leaves the upcoming week and a half in a great position to let us know how freaked out we should be. 

Econ Data / Events

Core MM PPI

-0.1 vs +0.3 f’cast, 0.1 prev

Core YY PPI

3.3 vs 3.6 f’cast, 3.4 prev

Consumer Sentiment

50.8 vs 54.5 f’cast

1yr inflation expectations

6.7 vs 5.0 previously

5yr inflation expectations

4.4 vs 4.1 previously

Market Movement Recap

09:34 AM Losing ground despite softer PPI.  MBS down more than a quarter point and 10yr up 6.4bps at 4.496

12:51 PM Nice reversal off weaker levels.  MBS now down only an eighth  and 10yr up only 2.2bps at 4.45

02:35 PM Fizzling sideways now.  MBS down 7 ticks (.22) and 10yr up 6.7bps at 4.499

A Department of Government Efficiency team is working with FDIC leadership to “increase efficiency,” which could include cuts to contracts and streamlining staff. FDIC says DOGE staffers have “appropriate clearances.”