IMF News Gives Markets a Slight Nudge.

MBS continue to trade within the sideways range that has prevailed since yesterday afternoon although Fannie 3.5's did see a brief blip lower following the 12noon news that the IMF is increasing lending capacity to stem the EU debt crisis.  This originally "felt" like bigger news that it probably is and markets have been in the process of demonstrating that lackluster reaction.  In the short run though, this has resulted in 10yr yields breaking higher, out of their cozy little 2 day range seen in the video below.  If 10's continue to have a hard time getting back through the upper line in the following chart, MBS could soon be facing the prospect of breaking out of their own range (also shown in the video below).

But the degree to which the IMF news is the culprit in this little bout of weakness is debatable.  Certainly, a market reaction to the event is discernible, but from a technical standpoint, a) nothing much "new" is going on and b) current movements were the more likely eventuality in the first place.  Here's why...

First of all, 10yr yields continue to operate in the the sideways channel indicated by the grey lines in the chart below.  Yields would be hard-pressed to go much lower, so...  In this context the "IMF bounce" looks uneventful and perhaps even inconsequential.

What about stocks?  Big uptick in stocks right?  Again, while the brief rally is certainly there in the shorter term charts, what else were stocks going to do based on longer term charts?

Ah ha... so a bounce seems like it was in the cards anyway.  And maybe just the sort of bounce that merely offers a token romp higher but stops short of triggering any new bullish technical signals;

Pretty disappointing for stocks given the tenor of the IMF announcement in which Lagarde conjures up some dramatic imagery, saying this new initiative will "break the chains of contagion."  No comment...

MBS meanwhile, continue to go about their business... still holding the floor at 101-26, but running out of room overhead...

5 year Treasury auction coming up at 1pm...  Then FOMC minutes at 2pm.