The Day Ahead: More About The Next 2 Weeks Really

By: Matthew Graham

There are few days that look less important than today in today in terms of big-picture changes to bond market landscape.  Even if Treasuries were to break either line in the chart below, they'd still very likely be grinding sideways in a 1-2 month context.  Two caveats bear mentioning however.  First, there's the simple one about financial markets being inherently unpredictable.  Anything can happen despite the likelihood that it shouldn't. The second is a bit more optimistic however, and it concerns the downwardly sloped line in the chart.  Days without scheduled data and events often resign themselves to following technical levels and trends.

If this trend is indeed trending (as opposed to just simply "returning to 2.46"), we could see that continue today.  Above all else, we wouldn't read too much into today's activity when markets are either waiting on economic data to inform changes in Fed policy or, simply, changes in Fed policy.  That said, the Fed hasn't changed horses in mid stream since upping the ante with June's Announcement, even if they have been out doing rhetorical damage control.  That's to be expected.  The fact that markets had no meaningful reaction to Bernanke (perhaps because he brought very little by way of meaningful, actionable new information to the discussion) says it all.  So since there's no change in Fed policy, only data is left.  Today has not data, so only technicals, tradeflows, and randomness are left.  A good day of randomness might challenge this recent upper bound in MBS (coincides roughly with the 2.46 resistance in Treasuries).

MBS Live Econ Calendar:

Week Of Mon, Jul 14 2013 - Fri, Jul 18 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Jul 15

08:30

Retail sales mm

Jun

%

0.8

0.6

08:30

Retail sales ex-autos mm

Jun

%

0.4

0.3

08:30

NY Fed manufacturing

Jul

--

5.00

7.84

10:00

Business inventories mm

May

%

0.0

0.3

Tue, Jul 16

08:30

Core CPI mm, sa

Jun

%

0.2

0.2

08:30

CPI mm, sa

Jun

%

0.3

0.1

08:30

Core CPI yy, nsa

Jun

%

1.6

1.7

09:15

Capacity utilization mm

Jun

%

77.7

77.6

09:15

Industrial output mm

Jun

%

0.3

0.0

10:00

NAHB housing market indx

Jul

--

52

52

Wed, Jul 17

07:00

MBA Applications

w/e

--

--

533.3

07:00

MBA 30-yr mortgage rate

w/e

%

--

4.68

08:30

Housing starts number mm

Jun

ml

0.960

0.914

08:30

Building permits: number

Jun

ml

1.000

0.985

10:00

Bernanke Testimony (House)

--

--

--

--

Thu, Jul 18

08:30

Initial Jobless Claims

w/e

k

343

360

10:00

Philly Fed Business Index

Jul

--

8.0

12.5

10:00

Bernanke Testimony (Senate)

--

--

--

--

13:00

10yr TIPS Auction

--

bl

15.0

--

* 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"