Although it's a net positive to see MBS and Treasuries hold their ground at recent levels following yesterday's FOMC events, it does complicate things as far as gleaning market sentiment.  We were sort of counting on the reaction to take us somewhere other than "mostly sideways."  The fact that it did, places greater emphasis on--believe it or not--economic data in the near term.  

After all, you heard the man regarding QE3: "those tools remain very much on the table. We will not hesitate to use them."  Bernanke was unequivocal in saying the Fed is prepared to act as needed "to make sure the recovery continues."  We can only assume that "the recovery" in large part, is, and will continue to be gauged domestic economic data.  It's all very linear.  

In other words, if any market participants had any doubts as to where the Fed stood on the potential usage of further easing measures, there's much less doubt now.  Granted, Fed policy is only one of the two major parts to the current low-rate equation (the other, and probably larger being Europe), but it seems like markets need to know the commitment remains in order to trade 10yr yields under 2%.

Not to put too fine a point on it, that's why econ matters in the short term (might sound odd to say "econ matters" as if it's something outside the ordinary, but it actually has been a much less potent market mover over the last 6 months than the rest of economic history).  

Today's econ consists of Jobless Claims at 8:30am, expected to have fallen to 375k from last week's 386k, as well as Pending Home Sales at 10am.  The latter doesn't quite make the varsity squad as far as "mattering," but it's on the agenda and it's housing related, so there you go.  The afternoon brings the last of the week's Treasury Note auctions with the 7yr at 1pm.

But beyond tomorrow, what we're more interested in at this point is Friday morning's GDP and the following Friday's NFP.  Unlike the run-up to FOMC, where we were reasonably assured of relatively flat trading, the next 7 trading sessions should be a bit choppier by comparison and we'll have to wait to see how they evolve to get a clearer idea of where we're headed.

MBS Live Econ Calendar:

Week Of Mon, Apr 23 2012 - Fri, Apr 27 2012

Time

Event

Period

Unit

Forecast

Prior

Actual

Tue, Apr 24

09:00

CaseShiller 20 mm SA

Feb

%

+0.2

0.0

+0.2

09:00

CaseShiller 20 mm nsa

Feb

%

-0.6

-0.8

-0.8

09:00

CaseShiller 20 yy

Feb

%

-3.4

-3.8

-3.5

10:00

Monthly Home Price mm

Feb

%

--

0.0

0.3

10:00

New home sales-units mm

Mar

ml

.320

.313

.328

10:00

Consumer confidence

Apr

--

70.3

70.8

69.2

13:00

2-Yr Note Auction

--

bl

35.0

--

--

Wed, Apr 25

07:00

Mortgage market index

w/e

--

--

725.4

697.7

07:00

Mortgage refinance index

w/e

--

--

3936.3

3715.2

08:30

Durable goods

Mar

%

-1.5

+2.4

-4.2

11:30

5-Yr Treasury Acution

--

bl

35.0

--

--

12:30

FOMC rate decision

no policy chng expected. all about verbiage

14:00

FOMC Member Forecasts

 

14:15

Bernanke Press Conference

will press "press" for QE clarity? Probably

Thu, Apr 26

08:30

Initial Jobless Claims

w/e

k

375k

386k

--

08:30

Continued jobless claims

w/e

ml

3.29

3.297

--

10:00

Pending sales change mm

Mar

%

+1.0

-0.5

--

13:00

7-Yr Note Auction

--

bl

29.0

--

--

Fri, Apr 27

08:30

GDP (Q1 2011 – Advance)

Q1

%

+2.5

+3.0

--

09:55

U.Mich sentiment

Apr

--

75.7

75.7

--

09:55

U Mich conditions

Apr

--

81.0

80.6

--

09:55

U.Mich expectation

Apr

--

72.5

72.5

--

mm: month over month | yy: year over year | qq: quarter over quarter

 (n)SA: (non) Seasonally Adjusted