For third time in 4 days we've seen some compelling support come into play in MBS and Treasuries.  Not all of the support has come in at the same levels, but the post-NFP theme has been consistent in that 10yr yields have started to feel more of the effects of gravity as they move over 2.05.  This has translated to MBS generally well this week as spreads have come in a bit from Friday's levels (meaning MBS are keeping pace with or slightly outperforming Treasuries. 

The last two instances of supportive relief are clearly evident following the 10 and 30yr Treasury auctions this week.  The following chart runs the risk of minimizing the importance of Wednesday's ceiling but consider that we were up against weaker overnight trading this morning and a much stronger Jobless Claims report (and on NFP "Survey Week" to boot).  Moreover, consider where 10's went after finding these ceilings:

In short, 10's went right back to the same old resistance trendline.  This is a Pyrrhic Victory for bond markets as it reinforces the validity of overhead ceilings in 10's at the expense of facing equally tough resistance.  In general, stuff like this tends to happen when the market is range-bound or consolidating--especially ahead of a watershed event like next week's FOMC Announcement.  Barring surprises, this is very likely what's happening.  Zooming out to a wider time scale offers a bit more context and a bit more room to run.

Friday then, is just another "at-bat" for a rag-tag group of economic reports, none of which are too likely to move the needle outside the above ranges.  If there's confluence in theme among the manufacturing data (NY Fed at 8:30 and Fed's Industrial Production report at 9:15) and Consumer Sentiment at 9:55am, it could be enough to start an early "lead-off" ahead of next week's data.  Wild cards include the onset of Italian political discussions that may be starting next week and of course any unexpected headline shockers.

MBS Live Econ Calendar:

Week Of Mon, Mar 11 2013 - Fri, Mar 15 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Mar 11

00:00

No Significant Data Scheduled

--

--

--

--

Tue, Mar 12

13:00

3-Yr Note Auction

--

bl

32.0

--

14:00

Federal budget, $

Feb

bl

-228.00

3.00

Wed, Mar 13

07:00

Mortgage refinance index

w/e

--

--

4712.4

07:00

Mortgage market index

w/e

--

--

864.1

08:30

Export prices mm

Feb

%

0.0

0.3

08:30

Import prices mm

Feb

%

0.6

0.6

08:30

Retail sales mm

Feb

%

0.5

0.1

10:00

Business inventories mm

Jan

%

0.3

0.1

13:00

10yr Treasury Auction

--

bl

21.0

--

Thu, Mar 14

08:30

Producer prices mm

Feb

%

0.7

0.2

08:30

Producer prices, core mm

Feb

%

0.2

0.2

08:30

Current account

Q4

bl

-112.5

-107.5

08:30

Initial Jobless Claims

w/e

k

350

340

13:00

30-Yr Treasury auction

--

bl

13.0

--

Fri, Mar 15

08:30

Core CPI mm, sa

Feb

%

0.1

0.3

08:30

CPI mm, sa

Feb

%

0.6

0.0

08:30

NY Fed manufacturing

Mar

--

10.00

10.04

09:15

Industrial output mm

Feb

%

0.4

-0.1

09:15

Capacity utilization mm

Feb

%

79.3

79.1

09:55

U.Mich sentiment

Mar

--

77.5

77.6

* 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"