The last FOMC announcement--the one with the explicitly-stated 2013 target--resulted in a huge rally for bond markets, MBS included. MBS hit all-time-highs shortly thereafter, and were at there lowest recent levels near the end of August. Now with 2 more trading days to go before the next FOMC statement, MBS are smack-dab in the middle of that range. Not in exactly the same fashion, but in a similar move, 10yr notes are back near their 2.06+ levels which marked the previous daily closing low yield and has only been broken twice in recent memory: yields broke lower on 9/2 and back above on 9/5. It's been a bit disconcerting to see the rhythm with which yields have since bounced along that floor. But neither have they moved higher than 2.125, another prominent technical, and the hopeful ceiling marking the temporary sideways path of 10yr yields between now and FOMC. That'll occur on Wednesday with no major economic data earlier in the week (perhaps Housing Starts on Tuesday?). The entire week is appallingly light on data actually, only consisting of housing related data with the exception of weekly Jobless Claims. The redoubles the market's focus on FOMC, and to a lesser or greater extent on potential headlines out of Europe (lesser or greater depending on how juicy they might or might not be!). The frustrating conclusion is that bond markets appear poised to move either way and there's no clear indication that a new trend is in progress after we leveled off into a the sideways pattern of the past 2 days.

(Reuters) - It was an unprecedented visit designed to spur the euro zone into action. But Treasury Secretary Timothy Geithner's high-profile trip to Europe left some European officials more dumbstruck than starstruck.

Officials said Geithner was coming to propose how the region might try leveraging its emergency bailout fund -- the 440 billion euro European Financial Stability Facility -- to better tackle the crisis, much as the United States used leverage to handle the fallout from the subprime collapse.

But however good Geithner's intentions, the indications were that the meeting did not go as smoothly as he might have hoped. There was no word on whether voices were raised or what the temperature of the exchanges was, but Austria's finance minister, for one, was less than warm to Geithner's message.

"I found it peculiar that even though the Americans have significantly worse fundamental data than the euro zone that they tell us what we should do and when we make a suggestion ... that they say no straight away," Maria Fekter told reporters afterwards, recalling a difference of opinion between Geithner and German Finance Minister Wolfgang Schaeuble on how to reinvigorate the euro zone and tax financial deals.

(Reuters) - U.S. household debt contracted at a 0.6 percent annual rate in the second quarter while household wealth fell by $149 billion, the Federal Reserve said on Friday. Households mostly shed mortgage debt, which declined at a 2.4 percent annual rate. Consumer credit, a smaller part of household balance sheets, rose by 3.4 percent. A drop in the value of real estate dragged down household net worth to $58.5 trillion. Households have struggled to rebuild their net worth after the country's housing bubble popped and triggered the 2007-2009 recession, and wealth is still well below its peak of $64.3 trillion at the end of 2006, the figures show. Non-financial corporate businesses held $2.05 trillion in liquid assets, such as cash, in the second quarter, up from $1.96 trillion in the previous quarter, the data showed. (Reporting by Jason Lange; Editing by Andrea Ricci)