The Day Ahead: Absence of Data, Presence of Hope?

By: Matthew Graham

Not that economic data was our enemy on Thursday (more to do with follow through from Wednesday), but today we have no data, and a day behind us where ground was ultimately held despite the weaker start and despite the break of some hefty resistance in Treasuries.  The question is remarkably relevant: was that the last explosion?  Or is there more pain ahead? 

The best I can offer here is that each day holding above previous support would be positive, but we didn't hold above the previous session's support yesterday, so UNTIL we have our FIRST post-sell-off example, we'd remain defensive.  Unfortunately,  it is possible we could lose more ground before what should at least be some consolidation. 

Compared to 2010, we'd be about 80% through with the move.  If we were to extend the current sell-off by roughly the amount needed to match 2010, it puts Fannie 3.5s right around par (100-00), which would "only" be just over a point lower than yesterday's lows, and incidentally, the next support line on this wacky contraption known as a Gann fan:

This cutesy technical stuff is all well and good, but the fact is that we're watching the story unfold and no chart is ready to predict how it will happen yet.  Once we stop the free-fall, we can take a look at what might come next, but until then, we can only watch and wait.  Is there hope the waiting ends today?  Yes,  but there's still a risk it will not.

 

MBS Live Econ Calendar:

Week Of Mon, Jun 17 2013 - Fri, Jun 21 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Jun 17

08:30

NY Fed manufacturing

Jun

--

-0.50

-1.43

10:00

NAHB housing market indx

Jun

--

45

44

Tue, Jun 18

08:30

Housing starts number mm

May

ml

0.924

0.853

08:30

Building permits: number

May

ml

0.980

1.005

08:30

CPI mm, sa

May

%

0.1

-0.4

08:30

Core CPI mm, sa

May

%

0.2

0.1

08:30

Core CPI yy, nsa

May

%

1.7

1.7

Wed, Jun 19

07:00

Mortgage market index

w/e

--

--

670.7

07:00

MBA 30-yr mortgage rate

w/e

%

--

4.15

14:00

FOMC Announcement

n/a

%

--

0.25

14:00

FOMC Forecasts

n/a

--

--

--

14:30

Bernanke Press Conference

n/a

--

--

--

Thu, Jun 20

08:30

Initial Jobless Claims

w/e

k

340

334

08:58

Markit PMI

Jun

--

52.8

52.3

10:00

Existing home sales

May

ml

5.01

4.97

10:00

Philly Fed Business Index

Jun

--

-0.2

-5.2

13:00

30-Yr TIPS auction

--

bl

7.0

--

* mm: monthly | yy: annual | qq: quarterly | "w/e" in "period" column indicates a weekly report

* Q1: First Quarter | Adv: Advance Release | Pre: Preliminary Release | Fin: Final Release

* (n)SA: (non) Seasonally Adjusted

* PMI: "Purchasing Managers Index"