MBS MORNING: Limited Data, But Plenty Of Headline Potential, if MBS even care...

MBS have been disconnected from almost all economic data recently.  Even headlines, unless they're of the ilk of a $500bln fed purchasing announcement, fail to raise pulses that much.  Ironically, it's the Fed buying that's the likely culprit to the soporific stability.  With the exception of our big day of selling last week, it's been incredibly boring in terms of movement over the past few weeks.  So even though history dictates that volatility can ensue on days like today with limited scheduled data and plenty of headline risk, if MBS keep playing their same tune, it could be yet another sideways day.  Even what we'd normally consider "big" news in the form of Citi's TARP-backed loan announcment has failed to stir the pot much. Currently, we're at the same price levels as last post.  ZZZzzz...  ZZZZzzz...

Here are a few of the items that might help us wake up a bit:

The senate will continue to debate the new stimulus bill today, and many expect it to pass this week.  In about half an hour, we'll get pending home sales data, not normally a big impact on MBS, but interesting in this particular point in economic history as many will be looking for the effects of lower rates on purchase stimulation.  It's possible that, as the effects are seen, notions of lowering rates to stimulate the housing market will gain momentum with a more widespread audience.  At 1pm we have a 4 week T-bill auction.  Recently, if demand at such auctions deviates greatly from expectations, it's had an effect on the whole FI sector as treasuries pull MBS with them to some extent.

We'll be back with more in a bit, and of course price updates if they deviate more than a few ticks.