The Day Ahead: Home Prices, New Home Sales, Auction Cycle Begins

April has been a pleasant month for MBS so far.  Eleven out of the 16 trading days have been positive.  Only 3 of the 5 down days have been more than incidentally so, and even then, were more of a consolidation following the rally that opened the month (not to mention "completely reversed" in the following 3 sessions).  Since then, MBS have been locked equivocally in a high narrow range.  All of the above is seen in the chart below as well as retracements from mid-month lows to post-NFP highs.  

That same narrowness seen in MBS starting at the beginning of last week, has played out with some good technical boundaries in Treasuries as well.  It's starting to get a bit repetitive at this point, but there's clearly "something" about 1.683 with a few brief runs down into the 1.67's.  Thankfully 1.733 has been equally as bouncy (especially in overnight sessions) in the event of weakness.  Yesterday morning ran the full course in about an 2 hours.

Conclusion: much as was the case late last week, this continues to look like a market that hasn't quite decided on a direction for a pre-FOMC/ECB/NFP lead-off (all of that on tap next week), but that soon must.  Looking at events like today's New Home Sales, FHFA Home Prices, and 2yr Note auction, it's hard to imagine that anything but shocking results would challenge ranges in and of themselves.  Even then, we've seen our fair share of bond markets moving against the data in the past week.  If that happens again, any coinciding range break would reveal more about the underlying predisposition ahead of next week's bigger decisions.