MBS Day Ahead: New Home Sales and an Early Close

In yesterday's recap, I mentioned that Treasuries have been trending higher in a 'fairly classic consolidation pattern' and that this was evidence that nothing really mattered so far this week.  Put another way, the FOMC Minutes, the Fed speeches, yesterday's economic data, and everything else  could just as easily have not happened and trading levels would stand a good chance to look the same.  Here's a chart of that 'classic consolidation pattern,' often seen as a narrow, counter-trend correction that consolidates a fresh break outside a previously established range.

For today to alter the uneventful nature of the week, something truly epic would need to happen, either with New Home Sales data, or an unexpected headline.  And it's pretty much up to unexpected headlines in that case, because even a wildly higher or lower number in New Home Sales would be suspicious following last month's jump, not to mention the fact that it would be hard-pressed to change the low, sideways purgatory in which the data series continues to operate since the beginning of 2013.

Bond markets close at 2pm Eastern today in observance of Memorial Day.  Markets are fully closed on Monday.