MBS Live Week Ahead: Action-Packed Calendar of Data and Events

Another week in early 2017, another chance for bond markets to defend the rate ceiling set in late 2016(around 2.64% in 10yr yields) or strive for the rate floor (roughly 2.30%) .  Defending the ceiling seems like a bigger threat given the established short term uptrend, but anything can happen considering we're roughly mid-range in the year's most active week of data and events.

If we were starting to doubt the impact of economic data due to the market's recent preference for political headlines and post-holiday tradeflows, Friday challenged that assumption.  Weaker GDP and Durable Goods helped fuel a moderate rally that kept trading levels near the center of the 2-month range.

To whatever extent economic data can continue to serve as a motivation, there will be plenty of opportunity this week.  That theme crescendos on Wednesday as the week's bigger potential market movers begin to hit.  They'll be fairly well spaced-out with ADP Employment early, ISM Manufacturing at 10am, and the FOMC Announcement at 2pm.  

Keep in mind that this particular FOMC Announcement isn't on the same level as recent meetings.  There's no concomitant press conference or update on economic projections (the thing that really moved markets after the December meeting).  Rather, investors will only be able to scan the statement for verbiage changes that might hint at any evolution of thinking among Fed members.  In other words, while the Fed Statement should always be respected for its potential impact, this is one of those that might end up being a dud.

From there, markets chart a course for NFP on Friday morning and ISM Non-Manufacturing PMI 90 minutes later.  Thursday is a bit of an intermission in the context of the week's heavier hitting reports.