MBS Week Ahead: Limited Data; Important Auctions; Banks Closed Tuesday

By: Matthew Graham

With bonds closed on Tuesday for Veterans Day, market participation should be lighter than normal today.  That said, it won't be as light as it would be on some holiday weeks considering that futures remain open.  The implication is that we'll have to wait until Wednesday to determine whether the "high fly ball" hit on Friday will turn out to be a home run or something less exciting. 

Bond market home runs do definitely start out this way, but they can quickly turn ugly.  Wednesday-Friday must be watched closely for any signs that rates fall into the same pattern seen last November when a positive technical bounce instead gave way to a pervasive trend of weakness for the rest of the year.  In this chart, the lower two sections are momentum oscillators where higher = weaker and lower = stronger.

We'll see what we'll see soon enough, but the point is that we can't really be sure we're looking at reality until those last three days of the week.  This works out perfectly for Treasury auctions as well because today's 3yr auction is the least-important of the bunch.  The only top tier data release is on Friday morning with Retail sales at 8:30am.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
100-05 : -0-01
FNMA 3.5
103-19 : +0-00
FNMA 4.0
106-14 : +0-02
Treasuries
2 YR
0.4950 : -0.0075
10 YR
2.2890 : -0.0122
30 YR
3.0260 : -0.0068
Pricing as of 11/10/14 7:26AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Nov 10
13:00 3-Yr Note Auction (bl)* 26
Tuesday, Nov 11
0:00 Veterans Day *
Wednesday, Nov 12
7:00 Mortgage Market Index w/e 376.1
10:00 Wholesale inventories mm (%) Sep 0.2 0.7
13:00 10-yr Note Auction (bl)* 24
Thursday, Nov 13
8:30 Initial Jobless Claims (k)* w/e 280 278
13:00 30-Yr Bond Auction (bl)* 16
Friday, Nov 14
8:30 Import prices mm (%)* Oct -1.5 -0.5
8:30 Retail sales mm (%)* Oct 0.2 -0.3