Treasury Steps In as Bond Market Tests Critical Support Cautiously Floating
Treasury Secretary Bessent announces expanded bond buyback using the TGA, oil surges above $88 on Iran tensions, and all eyes turn to Jackson Hole, PCE, and GDP this week.
30-Year Fixed
6.875%
15-Year Fixed
6.375%
30-Year FHA
6.375%
Where We Are Now
A week of mixed signals. CPI came in tame for the third straight month, with headline at just 0.07% and core at 0.22%, bringing the year-over-year core rate to 2.5%, the lowest since February. PPI was flat versus 0.2% expected, with the core rising just 0.2% versus 0.3% expected. Retail sales disappointed, falling 0.6% versus 0.1% expected, with the savings rate near an all-time low at 2.7%. Existing home sales for July fell 1.7% to 4 million annualized, but June was revised higher to 4.13 million, making aggregate sales roughly flat. ICE home values rose 0.2% MoM and 1.5% YoY, the fifth straight month of gains and strongest YoY reading in 14 months. MBS broke above the 25-day moving average mid-week before falling back to test support at the Fibonacci level. Oil sits around $83/barrel as the 60-day Iran ceasefire MOU expired. The 10-year Treasury held in its range between the 25-day MA and 4.71 resistance.
New Home Sales
Source: Census Bureau, NAR, ICE. Housing starts down 12% with permits down 5%, mostly single-family. Pending home sales down 2.3% MoM and 2.2% YoY. ICE home values up 0.2% MoM and 1.7% YoY, highest YoY in 14 months. 6-month annualized pace at ~3%.
Inflation & Oil Pressure
Source: BEA, BLS, ApartmentList. PCE for July expected: headline MoM 0.1-0.15%, core 0.2-0.25%. YoY headline 3.7%, core 3.3% (not expected to budge until Nov/Dec). ApartmentList rents up 1.5% YoY (down from 2.5% a year ago), but CPI/PCE rents at ~2.9% due to ~1 year lag. Portfolio management contributing 0.4-0.5% to core PCE YoY.
30-Year Fixed
6.875%
15-Year Fixed
6.375%
10-Year Treasury
~4.71%
Inventory
4.6 months
MBS Technical Update, Week of August 24, 2026
The week opened with bonds under pressure, breaking beneath support on Monday before the Treasury announced an expanded bond buyback program using the Treasury General Account (TGA), which sent MBS briefly through the Fibonacci level and 25-day moving average. However, the gains proved ephemeral as oil surged above $88/barrel on escalating Iran tensions. The 10-year Treasury is pressing against the critical 4.71 resistance ceiling, and MBS has retreated back below the 25-day MA. All eyes now turn to Jackson Hole, PCE, GDP, and Fed Chair Warsh's first symposium appearance on Friday.
MBS Floor
101.39
Fibonacci level and 25-day MA. Was support, now acting as ceiling after retreat. Next floor ~15 bps below
MBS Resistance
50-Day MA
At 101.7, roughly 20 bps above current levels. Briefly pushed through 25-day MA on Aug 19 before retreating
10-Yr Treasury
~4.71%
Pressing against critical resistance ceiling. If breaks, next stop at 4.75. 25-day MA just below at ~4.64
Oil (WTI)
~$88/bbl
Surging on Iran tensions, Trump threatening severe sanctions. Diesel up ~50% since start of war
What Improved
- • Treasury Secretary Bessent announcing expanded bond buyback using TGA (~$950B balance)
- • Treasury buyback doubled from $2.7B to at least $4B/month minimum, ceiling removed
- • MBS briefly pushed through Fibonacci level and 25-day MA on Aug 19 (up 16 bps)
- • 10-year Treasury dropped to 4.63-4.64% on Treasury announcement (down 7 bps)
- • ICE home values up 0.2% MoM, 1.7% YoY (highest YoY in 14 months)
- • 6-month annualized appreciation pace at ~3%, matching forecast
- • ApartmentList rents decelerated to 1.5% YoY (from 2.5% a year ago)
- • Rent lag suggests future inflation help (~1 year lag in CPI/PCE)
- • Inflation tame over past 3 months, Dallas Fed trim mean already at target
- • Portfolio management methodology change expected next month (could lower core PCE)
- • Initial jobless claims still low at 206,000 (down 6,000)
- • Treasury buyback operations extended through November 4
- • ADP weekly jobs slightly up to 9,500/week from prior week
- • Home price appreciation resilient, wealth creation opportunity for buyers
What to Watch
This week: Home price data Tuesday, New home sales Tuesday 10am, PCE Wednesday, GDP, Jackson Hole Thursday-Friday, QCEW revisions Friday
- • Treasury buyback gains proved ephemeral on Aug 20 (gave back all gains)
- • Oil surging above $88/barrel WTI on Iran tensions, Trump sanctions threats
- • Diesel prices up ~50% since start of war (99% of land freight)
- • 10-year pressing against 4.71 resistance ceiling, next stop 4.75
- • MBS back below 25-day MA and Fibonacci, ~15 bps room to downside
- • Fed minutes: 3 voting members wanted 25 bps hike at last meeting
- • Fed futures pricing 32% chance of September rate hike
- • Next Fed meeting September 16, Jackson Hole this Thursday-Friday
- • PCE YoY not expected to budge (3.7% headline, 3.3% core) until Nov/Dec
- • Portfolio management contributing 0.4-0.5% to core PCE YoY
- • Housing starts down 12%, permits down 5% (single-family)
- • Pending home sales down 2.3% MoM, 2.2% YoY
- • Walmart Q2 sales below expectations, consumer weakening
- • JOLTS: ~19% of job postings not real jobs (inflated data)
- • Corporate debt (AI buildout) competing for bond market liquidity
- • 30-year Treasury at multi-decade highs
- • Continuing claims rising to ~1.8M
- • QCEW job market revisions on Friday could be market-moving
- • Fed Chair Warsh's first Jackson Hole speech Friday
Current Stance: CAUTIOUSLY FLOATING, MBS BELOW 25-DAY MA, 10-YR AT ~4.71%, OIL ~$88/BBLTreasury Secretary Bessent announcing expanded bond buyback using TGA (~$950B), at least $4B/month. MBS briefly broke through Fibonacci and 25-day MA on Aug 19 (up 16 bps) but gains proved ephemeral as oil surged above $88 on Iran tensions. 10-year pressing against 4.71 resistance ceiling. Housing starts down 12%, pending sales down 2.3%. Fed minutes revealed 3 members wanted a hike, futures pricing 32% chance of September hike. PCE Wednesday, GDP, Jackson Hole Thursday-Friday with Warsh speaking. ICE home values +0.2% MoM, +1.7% YoY (highest in 14 months). ApartmentList rents decelerating to 1.5% YoY. We're floating but on guard, watching 4.71 and the 25-day MA closely.
The Trend: One Thing Leads to Another
The week was dominated by a tug-of-war between Treasury intervention and escalating oil prices. Monday opened with bonds under pressure, breaking beneath support, with the 30-year Treasury reaching multi-decade highs and the 10-year breaking above a ceiling. Tuesday brought a turn as the Treasury announced expanded bond buyback operations, using the Treasury General Account (TGA, ~$950B) to fund purchases of longer-dated maturities. This was a doubling from $2.7B to at least $4B/month with the ceiling removed, essentially monetizing the debt. MBS surged 16 bps, pushing through the Fibonacci level and 25-day MA, while the 10-year dropped to 4.63-4.64%. However, the gains proved ephemeral as oil surged above $88/barrel WTI on escalating Iran tensions and Trump threatening severe economic sanctions. Diesel prices are up almost 50% since the start of the war, impacting 99% of land-based freight. The Fed minutes from 3 weeks ago revealed 3 voting members wanted a 25 bps hike, though this was before the tame CPI and PPI reports. Fed futures are pricing a 32% chance of a September hike. Housing starts plunged 12% with permits down 5%, pending home sales fell 2.3% MoM, and Walmart's Q2 missed expectations, all signaling a weakening consumer. ApartmentList rent data showed YoY rents up just 1.5% (down from 2.5% a year ago), highlighting the enormous lag in CPI/PCE rent figures (~2.9%), suggesting future inflation help. The bond market would respond well to a rate hike, but it would be wrong for the economy. We are floating cautiously.
"The bond market likes recessions. The bond market likes slow economic conditions. Would it be the right thing to hike rates for the economy? No, because it would damage the economy. But the bond market would likely respond well to that."
Key Market Dynamics
Treasury Steps In with TGA Buyback
Treasury Secretary Bessent announced the Treasury will use the Treasury General Account (TGA, ~$950B) to fund expanded bond buyback operations. Previously buying $2.7B/month, now doubling to at least $4B/month with the ceiling removed. Bond market responded favorably (MBS up 16 bps, 10-year down 7 bps) but gains proved ephemeral the next day. Operations extended through November 4.
Oil Surges on Iran Tensions
Oil surged above $88/barrel WTI (close to 89) driven by escalating Iran tensions and Trump threatening severe economic sanctions. Diesel prices up almost 50% since the start of the war, impacting transportation costs. 99% of land-based freight uses diesel. Strait of Hormuz deficit remains a concern. Insurance costs boosting effective oil prices.
Housing Starts Plunge
Housing starts dropped 12% with permits down 5%, mostly in the single-family category. Pending home sales fell 2.3% MoM and 2.2% YoY. Builders pulling back on supply, now at 1.2M annualized pace vs 1.4M household formations. Active listings at 1.1M vs 1.2M pre-COVID, existing home inventory at 1.1M vs 1.5M pre-COVID. NAHB builder confidence still in contraction below 50.
Fed Minutes Reveal Hawkish Views
Fed minutes from the last meeting (before tame CPI/PPI) revealed 3 voting members wanted a 25 bps hike, and many said rates would need to rise if inflation doesn't decline. The minutes cited a 'stable' labor market, but this was before BLS showed July job losses. Warsh favors 6 meetings/year instead of 8. Fed futures pricing 32% chance of September hike. Next meeting September 16. The bond market would respond well to a hike, but it would damage the economy.
Consumer Showing Strain
Walmart Q2 sales grew 2.6% but missed expectations. Customers spending less per trip, trade-downs increasing, growing share of higher-income shoppers. Walmart using $3B tariff refund to keep prices down. JOLTS report shows ~19% of job postings are not real jobs (ghost postings). ADP weekly jobs at just 9,500/week (~41K/month). Corporate debt from AI buildout competing for bond market liquidity. Savings rate near all-time low. Continuing claims rising to ~1.8M.
Where We're Going
All eyes turn to Jackson Hole this Thursday and Friday, where Fed Chair Warsh will deliver his first symposium speech. Historically, the Fed has used Jackson Hole to signal policy changes, and last year Powell telegraphed a rate cut there. PCE on Wednesday is expected to show tame monthly readings (0.1-0.15% headline, 0.2-0.25% core) but the year-over-year numbers are not expected to budge (3.7% headline, 3.3% core) until November or December. GDP and QCEW job market revisions also arrive this week. The Treasury's expanded buyback program is a wildcard, while oil above $88 and escalating Iran tensions remain headwinds. The 10-year Treasury is pressing against the critical 4.71 ceiling, and a break above could send yields to 4.75. MBS has room to the upside if it can reclaim the 25-day MA and Fibonacci, but also ~15 bps of room to the downside before the next support. We are cautiously floating but staying on guard.
Positive Catalysts
- Treasury Secretary Bessent announcing expanded bond buyback using TGA (~$950B balance)
- Treasury buyback doubled from $2.7B to at least $4B/month minimum, ceiling removed
- MBS briefly pushed through Fibonacci level and 25-day MA on Aug 19 (up 16 bps)
- 10-year Treasury dropped to 4.63-4.64% on announcement (down 7 bps)
- ICE home values up 0.2% MoM, 1.7% YoY (highest YoY in 14 months)
- 6-month annualized home appreciation pace at ~3%, matching forecast
- ApartmentList rents decelerated to 1.5% YoY (from 2.5% a year ago)
- Rent lag suggests future inflation help (~1 year lag in CPI/PCE)
- Inflation tame over past 3 months, Dallas Fed trim mean already at target
- Portfolio management methodology change expected next month (could lower core PCE)
- Initial jobless claims still low at 206,000 (down 6,000)
- Treasury buyback operations extended through November 4
- Home price appreciation resilient, wealth creation opportunity for buyers
- 3% appreciation on $500K home = $15K in year one, $172K over 10 years
- Homeowners have 44x the net worth of renters
Risk Factors
- Treasury buyback gains proved ephemeral on Aug 20 (gave back all gains)
- Oil surging above $88/barrel WTI on Iran tensions, Trump sanctions threats
- Diesel prices up ~50% since start of war (99% of land freight)
- 10-year pressing against 4.71 resistance ceiling, next stop 4.75
- MBS back below 25-day MA and Fibonacci, ~15 bps room to downside
- Fed minutes: 3 voting members wanted 25 bps hike at last meeting
- Fed futures pricing 32% chance of September rate hike
- Next Fed meeting September 16, Jackson Hole this Thursday-Friday
- PCE YoY not expected to budge (3.7% headline, 3.3% core) until Nov/Dec
- Portfolio management artificially inflating core PCE by 0.4-0.5%
- Housing starts down 12%, permits down 5% (single-family)
- Pending home sales down 2.3% MoM, 2.2% YoY
- Walmart Q2 sales below expectations, consumer weakening
- JOLTS: ~19% of job postings not real jobs (inflated data)
- Corporate debt (AI buildout) competing for bond market liquidity
- 30-year Treasury at multi-decade highs
- Continuing claims rising to ~1.8M
- QCEW job market revisions Friday could be market-moving
- Fed Chair Warsh's first Jackson Hole speech Friday
- Summer thinness could cause drift
- Savings rate near all-time low
- MBA refis down 18% YoY
Current Stance
CAUTIOUSLY FLOATING. MBS below 25-day MA and Fibonacci at 101.39, 10-year pressing against 4.71 resistance. Treasury Secretary Bessent announcing expanded bond buyback using TGA (~$950B), at least $4B/month. MBS briefly broke through Fibonacci and 25-day MA on Aug 19 (up 16 bps) but gains proved ephemeral. Oil above $88/barrel on Iran tensions, diesel up ~50% since war. Housing starts down 12%, pending sales down 2.3%. Fed minutes: 3 members wanted hike, 32% chance of September hike. PCE Wednesday, GDP, Jackson Hole Thursday-Friday. ICE home values +0.2% MoM, +1.7% YoY. ApartmentList rents decelerating to 1.5% YoY. Watching 4.71 and 25-day MA closely. If 10-year breaks 4.71, next stop 4.75.
Today's Rates
As of August 25, 2026, subject to change without notice
Rates are for informational purposes only and subject to change without notice. APR includes fees. Contact your loan officer for a personalized quote.
Bottom Line
The week opened with bonds under pressure as MBS broke beneath support on Monday, but the Treasury announced an expanded bond buyback program using the Treasury General Account (TGA, ~$950B), at least doubling purchases to $4B/month with the ceiling removed. MBS briefly pushed through the Fibonacci level and 25-day MA (up 16 bps) before gains proved ephemeral as oil surged above $88/barrel on escalating Iran tensions. Housing starts dropped 12%, permits down 5%, and pending home sales fell 2.3% MoM. The 10-year Treasury is pressing against the critical 4.71 resistance ceiling. Fed minutes revealed 3 voting members wanted a rate hike, and futures are pricing a 32% chance of a September hike. The bond market would respond well to a hike, but it would be wrong for the economy. All eyes turn to Jackson Hole this Thursday-Friday with Fed Chair Warsh's first symposium speech, plus PCE, GDP, and QCEW revisions. We are cautiously floating but staying on guard, watching 4.71 and the 25-day MA closely.