MBS Day Ahead: Focus Remains Overseas as Deadlines Loom

There's very little left on the domestic calendar this week in terms of economic data.  Today brings only Jobless Claims in the morning and the 30yr bond auction in the afternoon.  Jobless Claims isn't a reliable market mover these days and neither is tomorrow's Wholesale Trade data.  So really, it's today's 30yr auction at 1pm as far as domestic events are concerned.

The calendar is peppered with other items of interest though: Fed speakers.  There are 5 of them over the next 2 days with Yellen herself making an appearance in Cleveland tomorrow at noon.  Somewhere in one of these 5 speeches and potentially in Yellen's Q&A (if there is one), we can hope to get clarification on how things may have changed for the Fed following the June meeting, in light of more recent economic developments in Greece and China. 

As an aside, the Fed mentioned China as a concern in the meeting minutes.  Is that not a bit odd considering that the Chinese stock market rout really hadn't yet begun at the time of the meeting?

Even if Yellen says something terribly interesting, markets won't feel like they have permission to react to it as much as they otherwise might.  Reason being: Greece looms large over the next 2 days.  It's one thing for us to know that Sunday is a major deadline for progress in recent discussions (or at least EU leaders want us to believe that it is).  It's another thing for Greek proposals to actually make it through European parliaments in order that they can even be negotiated this weekend. 

In other words, this weekend's drama is dependent on the preparatory steps taken over the next 2 days.  This, along with a potential Asian equities bounce gives us more than enough to follow without thinking of old-fashioned things like domestic economic data.

Long story short, it's more headline-watching for surprises from around the world, rather than watching fundamentals here at home.