MBS Day Ahead: With the Fed Out of the Way, Now What?

Looking back on the past few days of trading activity, we see that absolutely nothing has happened since Monday's quick correction following Friday's crazy NFP day.  10yr yields have been hovering right around pre-NFP levels ever since.  What changes this?  (Fun Fact: March 18th FOMC  day close, NFP day high and yesterday's close, all 1.906!)

First thing's first: it sure wasn't yesterday's Fed Minutes!  For the record, everyone knows that most of the Fed sees the first rate hike in 2015.  Everyone knows there are a few who see it as early as June and a few who don't see it until 2016.  Everyone knows the Fed says that the timing of the rate hike is data dependent, but hardly anyone believes that it's solely dependent on the data.

As such, the data is not abundantly interesting.  That said, it's all we really have when it comes to observable market movers.  Everything else (and it's been too much recently) is driven by trading that's detached from the economy and economic data.  This refers to things like corporate bond hedging, auction accommodation, and algorithmic trading based on technical levels.

Long story short, we're waiting--not only to be inspired, but also to discover what the next source of inspiration will be.  One thing's for sure for the remainder of this week: it won't be any of the economic data today or tomorrow.  So if there's any inspiration to be had, it's not on the calendar.  The only possible exception would be the completion of the Treasury auction cycle, which can occasionally act like a big bullish or bearish vote for bond markets.  That's been too random recently to count on though.