UMBS opened down 16 bps.

Contracts on the S&P 500 and Nasdaq 100 traded around flat, though chipmakers — at the forefront of the recent rally — rose in premarket trading.  Both US indexes ended Friday at all-time highs, with the S&P

500 having advanced in 16 of the last 18 weeks, a run not seen since 1971.

While markets have broadly pushed Fed policy-easing expectations to July, from the previously anticipated May, traders still expect 75-100 basis points worth of rate cuts this year. Some hints could come this week from Fed Chair Jerome Powell’s congressional testimony, while the European Central Bank will hold a policy meeting on Thursday. A raft of economic data is also due, including US monthly payrolls figures on Friday.

We’ve been looking forward to the first week of March since the Feb 13th CPI report because this is the first time since then that we’ll see a top tier economic report capable of providing a meaningful cue for bond market momentum.  If there’s one report in mind to fill that role, it’s Friday’s jobs report.  But there are other worthy lieutenants on each of the preceding three days.  Monday, however, is a dud in terms of scheduled data–a placeholder day while we prepare for higher potential volatility.

Consumer sentiment fell in February, according to the University of Michigan Consumer Sentiment Survey. We remain well below historical averages despite the good economic numbers. Short-term inflationary expectations ticked up from 2.9% to 3%, while long-term expectations remained at 2.9% for the third straight month.

The Fed released a report on Friday, flagging some of the risks for the banking sector and the overall economy. In it, they said they weren’t ready to move down the Fed Funds rate until they gain greater confidence that inflation is moving back down to its 2% target.

Every now and then the bond market makes a case for a 4 day work week.  Today is one of those days as absolutely nothing of consequence transpired in terms of trading levels.  Volume was also the lowest since the Monday before the last CPI report 3 weeks ago.  That’s a fitting milestone considering we’ve been waiting for this week of data ever since that CPI report sent rates quickly higher, but in case it’s not already clear, it’s the week as a WHOLE that matters.  Today was just a placeholder ahead of a steady ramp of scheduled events culminating in Friday’s jobs report.

UMBS ended the day down 14 bps at 100.47