The Day Ahead: 10yr Treasury Auction and Not Much Else

Yesterday's Trade Deficit numbers played something of a similar role to Monday's ISM data in that they stood as a traditionally important piece of economic data that did very little to change the current landscape of rates markets.  Granted, ISM is the punchier of the two, so we'd be well within our right to expect limited impact from the Trade Gap, but there was simply no impact.   Until/unless something happens to render it inapplicable, the thesis remains: the time between now and the FOMC Minutes later this month stands out as having a unique sort of inertia where the bond markets will need to be acted-upon by a large enough force to move them from their sideways slides.  Without such a force, the consolidative patterns ahead of the FOMC Minutes (and the jobs report 2 weeks later) are already evident in Treasuries and MBS.  Here's a new look at yesterday's consolidative theme as seen in 10yr yields:

The MBS chart is noticeably zoomed in compared to Treasuries in order to show the very narrow sideways ranges that have dominated the first two days of the past two weeks, AND how those ranges have been almost exactly the same.  All that "W" business in the middle is Wednesday-Friday of last week.  Quiet quiet, LOUD LOUD LOUD, quiet quiet.  The only difference this week is that we don't have ADP, FOMC, Month-End, and GDP 2 days before NFP.  In fact, all we have is this lousy 10yr Treasury Auction at 1pm.  To be fair, it's not really that lousy, but it's not up to the challenge of making as much noise as last Wednesday's data did.