MBS Recap: Yellen Passes Without a Trace. What Now?!

All eyes were on Yellen's 10am speech from Jackson Hole, then all eyes were closed as traders fell asleep from boredom.  Yellen said nothing we didn't already know, although one headline (about the case for a rate hike being stronger) sent rates initially higher.  Once markets realized they already knew that, rates moved back down to the lows of the week.

Comments from Fed Vice Chair Fischer followed shortly thereafter and pushed bonds back in the other direction.  Unfortunately this move was exacerbated by lower volume and liquidity of a summertime Friday afternoon.  Too, markets could be justifiably concerned about next week's data putting a hawkish spin on a relatively neutral Yellen speech.  

On a positive note, the weakness brings bonds only right top the edge of the recent range. 

The bigger question is: What Next?!

What indeed!  As the case continues to be, one thing the Fed is serious about is the fact that they're "data dependent."  With that in mind, there is a ton of data next week.  All the normal "first week of the month" top-tier releases are coming out, including NFP on Friday.  If the tenor of the data clearly supports the Fed's ability to make a firmer commitment (either to hiking or waiting), this is when we might expect to see a more pronounced move outside the recent range.