MBS Day Ahead: Still Vulnerable to Ukraine Headlines; Shifting Gears to Econ and Fed

Day 2 of post-referendum Ukraine may well look a lot like day one.  What some feared would become an actual war, instead may simply fade from importance as a war of words.  It's still too soon to know if this will actually be the case, but some of that uncertainty still benefits bond markets.  The implicit downside here is that there's more room to weaken if geopolitical risks continue to fade. 

The less focused markets become on Ukraine, the more focus can turn toward the economy and Fed policy.  On the Fed front, nothing too disruptive is expected, though as they begin their 2-day meeting today, investors are at least curious about how the forward guidance may change tomorrow.  The leading assumption is that the Fed's heretofore "threshold" guidance (i.e. specific unemployment targets in exchange for specific actions) is likely to be changed out for qualitative guidance.  That doesn't have to be a market moving event, but with FOMC Announcements, there's always that potential.

Before that, we'll get a few reports today, both at 8:30am.  The Consumer Price Index (CPI) continues to lack it's former ability to inspire market movement.  That may change some time in the next few years, but we'll cross that bridge when we come to it.  Housing Starts are forecast to come in slightly higher than the previous reading, but at historically lower levels.