MBS Day Ahead: One More Day Without Data; US Bonds Lagging; Technical Struggles

The first two days of this week were "nice."  They got us back in line with what had been the weakest levels of the year before last Friday.  In other words, this week has only been good because Friday was so bad.  Not only that, but things haven't even gotten convincingly good for US bond markets yet this week. 

If anything, they've been conflicted, with some positive and negative signs in the charts.  The inability to break short term pivot points suggests more than a little hesitation in getting right back into the rallying spirit.

The unwillingness to keep pace with broader market movements is also something to watch:

There is also hesitation in the longer term charts as 10's now struggle to get back below the 100-day moving average that offered support during the 2nd half of February, but in this chart there are other positive technical anecdotes balancing the outlook.  The only caveat is that the positive changes in these technical studies are still in the early phases.

For the 3rd straight day, we'll go without any major economic data in the morning, but the auction cycle gets more interesting with this afternoon's offering being the important 10yr note.  Finally, keep in mind that MBS "rolled" last night, That means March coupons are no longer trading and April coupons have taken over as the new representative for prices. Because April coupons have
always been trading about a quarter point below March coupons, it will look like prices dropped by an additional quarter of a point overnight.