The Day Ahead: Not Much Ado About Fed Minutes; Bernanke Later

The first two days of the week have progressively undone much of last Friday's damage. but neither has been much to write home about in terms of volume or participation.  Under normal circumstances, today's FOMC Minutes should be a huge deal.  Almost all the key ingredients are there--Fed policy obviously dictating momentum, markets highly reactive to nuanced communication, volume dies down and trading levels even out leading up to the event, and it's one of the two biggies in terms of FOMC communications. 

But circumstances aren't normal and there's reason to believe the Minutes can't do any more damage to bond markets than the events of June 19th already have (that was the Announcement and Bernanke press conference arising from the meeting whose minutes we're about to read).  There seems to be consensus that this iteration of minutes is "safe," and that the focus is more justified on the 10yr Auction before and Bernanke afterward.  Even then, perhaps this week is the unofficial vacation week for markets ahead of Bernanke's Congressional Testimonies next week (Wednesday and Thursday).  If that's NOT the case, today is the day we find out.

The auction is at 1pm, Minutes at 2pm, and Bernanke at 4:10pm.   MBA's weekly mortgage index is out at 7am, and though it's not a market mover, it will be interesting to see what effects the rise in rates may have had on the purchase index, as well as how much of Friday's sell-off remains visible in the 30yr rate.  The past two days likely take it closer to a 10bp rise vs the 30bp rise it would have otherwise been.