MBS Live Day Ahead: More Econ Data, Plus Tax Bill Vote, But Bonds Might Not Care

While today will play host to another set of economic reports as well as the House vote on its version of the tax bill, bond markets may continue to let other factors drive trading decisions.  

The 8:30am economic data includes Jobless Claims, Import Prices, and the Philly Fed Index.  None of those are especially heavy hitters--especially Claims (not for the past few years anyway).  Industrial Production at 9:15am can occasionally move markets, but not reliably.  10am NAHB Builder Confidence data is more of an industry curiosity than anything.

The House is also expected to pass its tax bill, but markets likely won't care too much because the Senate is busy with its own tax bill, and until the two chambers come together on something that looks agreeable, all of the tax reform rhetoric is being taken with a grain of salt.

That leaves bonds to continue doing what they've been doing: trading ranges, following the yield curve, and grinding sideways to slightly higher inside the trend channel that's been intact for most of the past 2 months.  The overnight session saw a bounce off the lower end of that trend channel and it set us up for a showdown with the 2.36% pivot point this morning.  "So far so good" in that regard.  If we happen to break higher, 2.40% would be the next level of concern.  But if we can manage a break below the lower end of the trend channel, then we can talk about another test of 2.30 or 2.28% again.