MBS CLOSE: Limited Action Today. Limited Data Tomorrow

Take a look at today's chart...

At first blush, MBS appear to be in the midst of a relatively interesting battle with something around 101-00 in 4.5's over the past two sessions--that's until you consider the last two sessions have been largely a function of duration-matching with the yield curve.  In other words, treasuries lead, MBS follow.

It's always that way to certain extent as broad movements in the rates market will usually be similar between benchmarks like treasuries and their spread products, like MBS, swaps, corporates, etc..., but for the past two days, their movements have exhibited the sort of close connection that only comes when one is taking cues from the other.  If we overlay the two, the point becomes more clear.

(keep in mind, the following chart uses an INVERTED SCALE for treasuries so that strength and weakness are now the same direction for MBS and Tsys)

Yes, it would be quite something if one line completely overshadowed the other, but even at the points where the lines diverge, you can still see that they share almost all the same intraday highs and lows. 

Bottom line, nothing of sufficient interest to drive MBS to a display a "mind of their own."  But here's the biggest let-down: even if the charts weren't so aligned, there wasn't sufficient volume today to suggest it would mean much anyway.  Chalk it up to cautious, narrow, pre-NFP Monday.

Tomorrow is not much better in terms of potential inspiration.  All you get are a couple of Fed speakers (Rosengren and Kocherlakota) at 1pm and 2pm, preceded by Auto Sales throughout the morning.  Even that is largely anticipated to be less than representative due to weather and Toyota's epic recall (which, apart from the obvious "raised eyebrow" effect, gives potential car buyers something else to take care of before they can buy, but more than anything, creates a massive workload for dealerships).

Without much to watch tomorrow, even treasuries may be cue-takers if stocks decide to do anything interesting.  AQ already showed you the first resistance that stocks broke through earlier today, and the S&P ended up closing right on the fence of one of the most  significant levels of the past 3 months at 1116.  Any meaningful push higher (or conversely, a decided bounce lower) could pave the way for some good old fashioned stock lever effect. 

Maybe it's all for the best as the DURP and FMRRM fans out there have some calling to do...