Despite news that the President will end his holiday in Hawaii today and return to Fiscal Cliff negotiations, trading volumes aren't much higher than Monday. The very slightly negative bias in the Treasury complex on Monday has shifted to slightly positive bias today with 10's down about 1.5 bps to 1.76. Fannie 3.0s opened near the weak side of Monday's range and have since moved to the highs of the week, up 3 ticks from the previous close at 104-22.

Most of the similarities in volume between Monday and Today can be explained by overseas market holidays sapping volume in the overnight session. Last time it was Tokyo, this time, Europe. US markets have a full session ahead, so the domestic session volume should ultimately be a bit bigger today, but we can't emphasize enough how very little that means (in both cases, these are the thinnest holiday trading volumes in recent memory).

As discussed in this morning's Day Ahead, markets were already expecting political leaders to trickle back into Washington today to either do some work on the Fiscal Cliff or simply strategize about how it'll be added to the list of New Year's resolutions. If anything, Obama's announcement that he's merely "departing" Hawaii today errs on the less aggressive side of expectations (as opposed to being back at the desk this morning, ready to go).

Perhaps that relatively less-aggressive approach to the Fiscal Cliff negotiations is having some slight positive effect for bond markets, but if given the choice between that and inconsequential, low-volume, sideways drifting, we'd choose the latter every time. The fact that it seems politicians will be doing some work ahead of the new year is good, but expected. Markets will need details before honoring Fiscal Cliff headlines with earnest, directional movement.

Also showing up on this morning's "not honored with earnest, directional movement" list is Case-Shiller Home Prices which improved on a seasonally adjusted basis. No discernible market reaction--no surprises. There's no other scheduled economic data for today, unless you count the Richmond Fed index at 10am (we don't). There is, however, a full day of equities trading which may turn out to offer some guidance later in the session, but so far, we're seeing the small amount of cash that got sidelined ahead of the 1.5 day break, merely filtering back into both sides of the market.

- Seasonally Adjusted 20 City +0.7 vs +0.5 Consensus
- Non-Adjusted 20 City -0.1 vs -0.2 Consensus
- No market impact
Data through October 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed home prices rose 4.3% in the 12 months ending in October in the 20-City Composite, out-distancing analysts’ forecasts. Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly declines in home prices in October.

The 10- and 20-City Composites recorded respective annual returns of +3.4% and +4.3% in October 2012 – larger than the +2.1% and +3.0% annual rates posted for September 2012. In nineteen of the 20 cities, annual returns in October were higher than September. Chicago and New York were the only two cities with negative annual returns in October. Phoenix home prices rose for the 13th month in a row. San Diego was second best with nine consecutive monthly gains.

Despite news that the President will end his holiday in Hawaii today and return to Fiscal Cliff negotiations, trading volumes aren't much higher than Monday. The very slightly negative bias in the Treasury complex on Monday has shifted to slightly positive bias today with 10's down about 1.5 bps to 1.76. Fannie 3.0s opened near the weak side of Monday's range and have since moved to the highs of the week, up 3 ticks from the previous close at 104-22.

Most of the similarities in volume between Monday and Today can be explained by overseas market holidays sapping volume in the overnight session. Last time it was Tokyo, this time, Europe. US markets have a full session ahead, so the domestic session volume should ultimately be a bit bigger today, but we can't emphasize enough how very little that means (in both cases, these are the thinnest holiday trading volumes in recent memory).

As discussed in this morning's Day Ahead, markets were already expecting political leaders to trickle back into Washington today to either do some work on the Fiscal Cliff or simply strategize about how it'll be added to the list of New Year's resolutions. If anything, Obama's announcement that he's merely "departing" Hawaii today errs on the less aggressive side of expectations (as opposed to being back at the desk this morning, ready to go).

Perhaps that relatively less-aggressive approach to the Fiscal Cliff negotiations is having some slight positive effect for bond markets, but if given the choice between that and inconsequential, low-volume, sideways drifting, we'd choose the latter every time. The fact that it seems politicians will be doing some work ahead of the new year is good, but expected. Markets will need details before honoring Fiscal Cliff headlines with earnest, directional movement.

Also showing up on this morning's "not honored with earnest, directional movement" list is Case-Shiller Home Prices which improved on a seasonally adjusted basis. No discernible market reaction--no surprises. There's no other scheduled economic data for today, unless you count the Richmond Fed index at 10am (we don't). There is, however, a full day of equities trading which may turn out to offer some guidance later in the session, but so far, we're seeing the small amount of cash that got sidelined ahead of the 1.5 day break, merely filtering back into both sides of the market.

- Seasonally Adjusted 20 City +0.7 vs +0.5 Consensus
- Non-Adjusted 20 City -0.1 vs -0.2 Consensus
- No market impact
Data through October 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed home prices rose 4.3% in the 12 months ending in October in the 20-City Composite, out-distancing analysts’ forecasts. Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly declines in home prices in October.

The 10- and 20-City Composites recorded respective annual returns of +3.4% and +4.3% in October 2012 – larger than the +2.1% and +3.0% annual rates posted for September 2012. In nineteen of the 20 cities, annual returns in October were higher than September. Chicago and New York were the only two cities with negative annual returns in October. Phoenix home prices rose for the 13th month in a row. San Diego was second best with nine consecutive monthly gains.

- Seasonally Adjusted 20 City +0.7 vs +0.5 Consensus
- Non-Adjusted 20 City -0.1 vs -0.2 Consensus
- No market impact
Data through October 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed home prices rose 4.3% in the 12 months ending in October in the 20-City Composite, out-distancing analysts’ forecasts. Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly declines in home prices in October.

The 10- and 20-City Composites recorded respective annual returns of +3.4% and +4.3% in October 2012 – larger than the +2.1% and +3.0% annual rates posted for September 2012. In nineteen of the 20 cities, annual returns in October were higher than September. Chicago and New York were the only two cities with negative annual returns in October. Phoenix home prices rose for the 13th month in a row. San Diego was second best with nine consecutive monthly gains.