Thursday made it clear that bond markets don't want to be here any more this week, nor do MBS.  The longer term view of markets paints a picture of big, compartmentalized ranges adjusting based on big-ticket game-changers.  We're talking about Fiscal Cliff mini-deals and FOMC Minutes in early January, ECB's LTRO repayments on January 25th, and most recently, Italian election at the start of this week.  Absolutely everything else that has gone on for the past two months has been in some league other than those events.  Here's how it's played out visually (lines apply to Treasuries in yellow, whereas stocks in blue are added for entertainment and reference):

Not annotated in the chart is the FOMC/Cliff deal stuff that kicked 10 yr yields up an over the 1.84 inflection point to start 2013.  From there, RANGE TRADE!  Moderate, but bullish for bond markets and stocks alike.  Then the ECB LTRO repayments kick yields up and over the 1.95 inflection area to once again lock into--you guessed it--a RANGE TRADE!    Although equities markets are doing whatever it is they're doing these days, for bond markets, the Italy debacle was enough to ratchet back into the January range.  We'll know a lot more about that if we happen to drift up near 1.95 any time soon or make another run below 1.84, but for now, that's a compelling range either until ECB/NFP next week, or something in the interim speaks loudly enough.

Economic data has really not spoken very loudly recently, at home or abroad.  There's a gigantic helping of it today though, especially in Europe where there are actually too many reports to discuss, but highlights include Markit PMI's, Italy Unemployment, Eurozone Unemployment and Eurozone Prices (could inform ECB policy announcement this Thursday).  A good day for MBS would be anything that stays above 103-16 in Fannie 3.0s and any 10yr yield action that makes another "lower high" vs  the previous session's high (would be 3rd day in a row).

MBS Live Econ Calendar:

Week Of Mon, Feb 25 2013 - Fri, Mar 1 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Feb 25

09:00

Italian Election: Polls Close

--

--

--

--

13:00

2-Yr Note Auction

--

bl

35.0

--

Tue, Feb 26

09:00

CaseShiller Home Prices

Dec

%

0.5

0.6

09:00

FHFA Home Price

Dec

%

--

0.6

10:00

New home sales-units mm

Jan

ml

0.385

0.369

10:00

Consumer confidence

Feb

--

61.0

58.6

10:00

Bernanke Testimony (Senate)

--

--

--

--

13:00

5yr Treasury Auction

--

bl

35.0

--

Wed, Feb 27

07:00

Mortgage market index

w/e

--

--

782.4

07:00

Mortgage refinance index

w/e

--

--

4244.6

08:30

Durable Goods

Jan

%

-3.9

4.3

10:00

Pending homes index

Jan

--

--

101.7

10:00

Bernanke Testimony (House)

--

--

--

--

13:00

7-Yr Note Auction

--

bl

29.0

--

Thu, Feb 28

08:30

Initial Jobless Claims

w/e

k

360

362

08:30

GDP (Preliminary)

Q4

%

0.5

-0.1

09:45

Chicago PMI

Feb

--

54.5

55.6

Fri, Mar 1

08:30

Personal Consumption

Jan

%

0.2

0.2

08:30

Personal income mm

Jan

%

-2.1

2.6

08:58

Markit Manufacturing PMI

Feb

--

--

55.2

09:55

Consumer Sentiment

Feb

--

76.3

76.3

10:00

Construction spending

Jan

%

0.4

0.9

10:00

ISM Manufacturing PMI

Feb

--

52.6

53.1

* mm: monthly | yy: annual | qq: quarterly | "w/e" in "period" column indicates a weekly report

* Q1: First Quarter | Adv: Advance Release | Pre: Preliminary Release | Fin: Final Release

* (n)SA: (non) Seasonally Adjusted

* PMI: "Purchasing Managers Index"