In many ways, the current week will serve as a prelude to the following week, which is exceptionally packed with big-ticket events.  From Wednesday to Friday (next week), we'll get the first look at Q2 GDP, ADP Employment, the last Treasury auction of the week, an FOMC Announcement, 'Month-End' (which can increase bond market activity/volatility), and NFP Friday on August 1st.  To whatever extent markets are willing to respond to economic data and monetary policy by then, it's our best chance to witness a break from what has been a mostly sideways range.

That's not a guarantee, however, because the reason for the sideways range has a lot to do with US bond markets being weighed down by global markets.  This is especially evident in Treasuries' most closely-related cousin, Germany's 10yr 'Bund.'  It's not alarming to see Bunds continue to outperform Treasuries.  Given the fact that they're more sensitive to geopolitical risk in Ukraine and that they're where everyone wants to be if anything bad happens in the Eurozone, Bund yields have every right to be low. 

Even so, at some level of outperformance, it's worth the risk and hassle to some investors to own Treasuries instead of Bunds.  We refer to this as "spillover demand."  Where would Treasuries be without it?  Probably moving higher...  In this chart, Treasuries are in Yellow and Bunds are in Red.

2014-7-20 Treasury vs Bund

Just as Bunds find reason to react more to geopolitical risk than Treasuries, Treasuries are in turn more sensitive than MBS.  This makes for a dynamic where MBS have generally been more even-keeled over the past few months--helping facilitate a very narrow rate range.

2014-7-20 MBS vs Treasury

As far as economic events worthy of inspiring volatility this week, our options are limited.  Today offers absolutely nothing, though Tuesday picks up a bit with Consumer Prices and Existing Home Sales.  After another quiet day on Wednesday, Thursday offers a decent line-up with Jobless claims and New Home Sales.  Durable Goods is the only report scheduled for Friday.  Geopolitical risk remains a consideration for markets, as does earnings season (bonds could tune into stock fluctuations for lack of anything better to do).

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
98-19 : +0-00
FNMA 3.5
102-14 : +0-00
FNMA 4.0
105-20 : +0-00
2 YR
0.4959 : +0.0159
10 YR
2.4854 : +0.0014
30 YR
3.2873 : -0.0047
Pricing as of 7/21/14 7:33AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Jul 22
8:30 CPI mm, sa (%)* Jun 0.3 0.4
9:00 Monthly Home Price mm (%) May 0.0
10:00 Existing home sales (ml)* Jun 4.98 4.89
Wednesday, Jul 23
7:00 Mortgage Market Index w/e 341.1
Thursday, Jul 24
8:30 Initial Jobless Claims (k)* w/e 308 302
10:00 New home sales chg mm (%)* Jun 18.6
Friday, Jul 25
8:30 Durable goods (%)* Jun 0.5 -0.9