The Day Ahead: GDP, Corporate Profits, 5yr Auction, and FOMC Minutes

This morning's alert from MBS Live:

Uneventful, Low-Volume Overnight Session. Bond Markets Largely Unchanged 8:24AM

Perhaps more than any other overnight session in recent memory, last night was quiet in terms of headlines, and low in volume as well. 10yr yields drifted up into the 7am hour, but have returned promptly to yesterday's 5pm levels for the NY open. MBS are a few ticks lower to start with Fannie 3.5's at 101-27 and Stock futures are in the middle of yesterday's range, currently at 1190 in the S&P. 

The supercommittee made official that which was almost perfectly speculated by various media outlets yesterday morning: there is no new debt deal and the $1.2 trl failsafes for 2013 spending cuts are automatically triggered (and yes, this provides a whole year to come up with a better solution). The market reaction was every bit the non-event we expected (and were scratching our heads over why the rest of the world seemed to think it was so important. It had no effect on trading late yesterday or overnight. Seriously... no one cares). 

Today's economic calendar contains a bit more than yesterday:

830am - Corporate Profits. After showing a 4.3% gain in the previous report, Corporate Profits are expected to have slowed to a 3.5% rate of growth 

830am - Real GDP - seen as unchanged from the advance reading of 2.5%. The only major component in which economists polled by Reuters expected a chance was a rise in Sales from 3.6% to 3.8% 

1pm 5yr Treasury Note Auction 

2pm FOMC Minutes (from 11/2/11 meeting) 

Those are some good potential market movers, especially later in the day with a more informative Treasury auction than yesterday's 2yr, and FOMC minutes to boot. Rate sheets should be flat to microscopically improved if current levels hold through print time. We'd have alerts at 101-22/23 as a first layer of concern, followed by 101-19 and 101-16 as "worse" and "worst." Floating intraday otherwise...

----------

The morning's best frameworks for approaching the impact of economic data are logically suggested by the ranges that emerged in yesterday's trading.  Here they are highlighted in the MBS Live charts below, as well a snapshot of current levels.