The Day Ahead: Moderate Morning Econ With Fed Minutes In The PM

Wednesday looks to be a different animal than Tuesday's rather logical and well-contained session.  Yesterday boasted one of the highest concentrations of economic data in recent memory, and while none of it was of earth-shattering importance, markets barely registered a response to the best of it.  In other words, Greece and the Eurozone got the nod as market-movers while the boat-load of domestic economic data got obligatorily mentioned, but little traded.

Back in the real world, markets generally traded two things, or rather, they traded two sides of one thing--namely: Greece's ability to repay its debts.  Case in point, when Greece noted that it would be paying some of its debt maturing yesterday, risk rallied somewhat (stocks gained, bond yields rose).  

Then, later in the day when Greece said it was unable to form a unity government and would proceed to elections, markets inferred an inability for Greece to pay its debt (based on the assumption that "election" = "anti-austerity leadership" = "EU Bailout monies rescinded" = "Default") and the risk rally reversed, resulting in multi-month lows for the Euro and dragging 10yr yields back in line with yesterday's 6+ month lows.  MBS hit all time highs in the afternoon with Fannie 3.5's touching 104-11.

When all was said and done, we could look back on the fact that Greece noted the impending decision on the unity government on Monday, and that no one really expected a government to be formed.  We see the fact that markets seemed "surprised" by that headline merely as the "confirmation bid."  Fairly regularly, there's a bit of additional trading momentum that follows an expected event simply due to it being officially confirmed.  

This isn't always the case, especially when the confirmation isn't a simple "either/or," but it's probably the case with y'day's Greece news given that trading levels didn't do anything incrementally crazier than their recent wont (no apostrophe).  The bottom line is that the day traded out fairly logically, especially in hindsight (which always seems to make us feel more insightful!).  Then again, we did KINDA say something similar HERE (not a bad read in hindsight!).  

Either way... today is different--loathe though we may find ourselves for having said so later in the day.  But we'll stick with it... Today is more likely to see market reaction to scheduled data for two reasons. 

1) Markets aren't aware that they're waiting for any particular Greek news today (though they remain cognizant of looming elections which would serve to moderate absolute volatility around current levels)

2) This afternoon's FOMC Minutes are worth trading, unlike the garden variety economic data seen y'day and this morning.

Briefly, we'll mention that the other data so we can get it out of the way.  Apart from the with-us-as-always MBA Mortgage Apps, there's Housing Starts and Industrial Production.  Historically, neither of these two are worth ignoring, but given current trading levels and their underlying motivations, we're not super interested in those economic reports to be quite frank.

What we are interested in is the fact that, by far and away, the heaviest concentration of volume and the biggest volume spikes on April 25th's "FOMC Day" were centered on the FOMC member forecasts and that today's FOMC Minutes represent the first substantive opportunity to delve deeper into the respective rabbit holes in the economic wonderlands that are the Fed governors' brains.