MBS Day Ahead: Busier Than Last, with FOMC Events and More Data

The week ahead is busier than last week on most fronts.  In terms of economic data, each of the first four days has at least one moderately important report.  This is in stark contrast to last week where only Thursday had any meaningful data.

On top of the data, Wednesday brings the more robust version of the FOMC's periodic policy announcements.  This version includes the Economic Projections as well as the press conference with the Fed Chair following the Announcement (2:00pm for the Announcement and Projections, and 2:30pm for the press conference). 

The Fed isn't expected to make any meaningful policy changes.  That means tapering will likely continue apace and no new verbiage is likely to be added framing future rate hike potential (i.e. it's currently intentionally vague and will likely remain that way).  Any deviation from the aforementioned status quo would be important.  On a final note, keep in mind that the last time we got the economic projections, they were the day's dark horse market-mover as they suggested a potentially shorter amount of time before the average Fed member saw rates lifting off.

Apart from the Fed and economic data, geopolitical risk is, once again, a bond market consideration of unknown magnitude.  While tensions remain high in Ukraine, the spotlight is currently on Iraq.  This hasn't yet been any sort of dominant market mover, but markets may remain sensitive to headlines until US involvement is completely ruled out.  One way we can detect geopolitical risk having a market impact (apart from Oil prices) is that it reinforces the 'stock lever' (i.e. bond yields and stock prices are more likely to move in the same direction when geopolitical risk is motivating the move).