MBS Day Ahead: One More Way to See It's Not About Greece

There are three moderately important economic reports on tap today.  In fact, 2 of them--CPI and Housing Starts--can be fairly respectable market movers if they fall far enough from consensus.  That said, they can also be duds.  Consumer Sentiment seldom has much of an impact, but the inflation expectations component is more important than normal due to its inclusion in Fed rhetoric over the past year. 

Why are we talking about all this domestic data when almost every other conversation in every other place by everyone else in the world has been about Greece?  Because Greece isn't moving markets right now.  The most colossal changes in the Greek situation had noticeable effects on domestic bond markets, but in the grand scheme of things, those effects were small.  You can see them in the chart below where the teal line takes a huge dip into July while the other lines barely budge.

The other point of this chart is to edify yesterday's discussion on potential support developing in core bond markets.  Granted, to make things truly special, we'd like to see a nicer push back toward lower yields, but such a push has to start somewhere.  The levels of support we're seeing this time around are completely different than the brief consolidation seen in May.  As long as that little white dotted line keeps holding, I'm happy.  You should be too.