MBS Live Day Ahead: Somewhat Massive Glut of Economic Data, Led by Retail Sales

After several days with essentially no relevant economic data, bond markets will get an entire week's worth this morning.  The headliner is undoubtedly Retail Sales, which is expected to come in at -0.1  after last month's 0.0 reading.  But that's not the only report capable of moving markets.  

The Philly Fed index and the Producer Prices data are also 2nd tier market movers, especially if they fall far from forecast levels.  Jobless Claims are 'with us as always,' but they haven't been a significant market mover for quite some time, as they tend to have more of an impact when cluing markets in to changes in the labor market situation (and labor markets haven't really changed in several years).

The interesting thing about the preceding data is that it all hits at 8:30am (likely by the time you read this).  If the data happens to carry the same message (i.e. all of the reports are stronger or weaker than expected), this could help bonds make up their mind as to whether yesterday was a correction before more weakness or the first sign that rates have found a ceiling.  

But the most interesting eventuality would be data coming in with a clear economic message followed by markets trading the opposite direction by the end of the day.  For instance, if the data is stable to stronger and bond markets still rally, that would be almost proof positive that rates have found their ceiling.  Conversely if the data is stable to weaker and bonds still lose ground, it would be another confirmation of the recent move toward higher rates.