There was some speculation that Biden would nominate Fed governor Lael Brainard to take over as Fed chair.  It an outside possibility, but one that left some room for market movement when the uncertainty cleared up. As of this morning, the word is in.  Powell stays.  Bonds are modestly weaker as a result (Brainard is decidedly the more bond-friendly of the two).  The bond market's more immediate concern will be the digestion of condensed Treasury auction schedule today and tomorrow.

The following chart shows the reaction to the morning's news.  It's actually somewhat debatable to give Powell's re-nomination credit for causing all of the weakness.  The stock market tells a more accurate story with a brief, small blip of weakness, but no lasting impact.

20211122 open.png

So why did bonds continue to weaken as stocks improved?  The early focus this week is on the condensed Treasury auction cycle.  2, 5, and 7 year notes would normally be auctioned on Tue, Wed, Thu respectively, but due to the holiday, that process will be complete by tomorrow afternoon.  Traders knew this last week, but there always seems to be a bit of extra concession at the beginning of weeks with a condensed auction cycle.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.5
102-06 : -0-08
Treasuries
10 YR
1.6010 : +0.0650
Pricing as of 11/22/21 11:33AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Nov 22
10:00 Existing home sales (ml)* Oct 6.20 6.29
10:00 Exist. home sales % chg (%)* Oct 7.0
11:30 2-Yr Note Auction (bl) 58
13:00 5-Yr Note Auction (bl)* 59
Tuesday, Nov 23
9:45 Markit Composite PMI * Nov 57.6
13:00 7-Yr Note Auction (bl)* 59
Wednesday, Nov 24
7:00 MBA Purchase Index w/e 282.5
7:00 MBA Refi Index w/e 2695.0
8:30 GDP Prelim (%) Q3 2.2 2.0
8:30 Durable goods (%)* Oct 0.2 -0.3
8:30 Core CapEx (%)* Oct 0.5 0.8
8:30 Jobless Claims (k) w/e 260 268
10:00 Core PCE Inflation (y/y) (%)* Oct 4.1 3.6
10:00 New Home Sales (ml) Oct 0.800 0.800
10:00 Consumer Sentiment (ip) Nov 66.9 66.8
10:00 Sentiment: 5y Inflation (%) Nov 2.9
10:00 Sentiment: 1y Inflation (%) Nov 4.9
10:00 New Home Sales (%) (%)* Oct 14.0