Bond markets did their best last week.  After hitting the year's best levels in late May, nothing else has really happened, or even stood the chance to happen.  Last week's events marked the first decent opportunity to break the rut. 

At first, it looked hopeful--for breaking the rut, that is.  It was anything but hopeful for trading levels as the stronger-than-expected GDP threatened to push rates over recent highs.  But MBS and Treasuries found their footing just in time.  Help came late in the week from a weak-ish jobs report and weak European markets (which continue to act like a wet blanket on aspirations for higher rates in the US).

2014-8-3 last week

The net effect was an ironic return to the same territory in which the week began.  Bigger picture though, the implication is that rates remain stuck in the same old range--pushed higher by all the "stuff" you'd expect, but weighed down by the European wild-card.  These two opposing forces can be approximated fairly well by the 100-day moving average above and the mid 2.4's below. 

2014-8-3 treasury techs

It's not a good idea to put stock in either of these lines as having any sort of predictive power about the future.  Rather, their best use is to act as trip-wires that let us know "something new" is happening.  So although we've had a few close calls here and there, for the most part, "nothing new" continues to be the thesis for nearly all of 2014.

That said, the two ends of this range are now so close together (because the upper end continues to fall), that yields will simply have to choose soon.  Whenever that break comes, it will be more meaningful if accompanied by a big event or even simply a big day of trading.  As far as this week is concerned, nothing on the economic calendar has the street-cred to play such a role, so the duty would fall to something 'unscheduled.'  The only possible exception is the European Central Bank announcement on Thursday morning (7:45am ET). 

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
98-14 : +0-00
FNMA 3.5
102-10 : +0-00
FNMA 4.0
105-16 : +0-00
2 YR
0.4762 : +0.0002
10 YR
2.4998 : -0.0052
30 YR
3.2954 : -0.0006
Pricing as of 8/4/14 7:30AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Aug 04
9:45 ISM-New York index * Jul 635.3
Tuesday, Aug 05
10:00 ISM N-Mfg PMI * Jul 56.3 56.0
10:00 Factory orders mm (%) Jun 0.6 -0.5
Wednesday, Aug 06
7:00 Mortgage Market Index w/e 341.7
8:30 International trade mm $ (bl)* Jun -44.8 -44.4
Thursday, Aug 07
8:30 Initial Jobless Claims (k)* w/e 305 302
15:00 Consumer credit (bl) Jun 18.50 19.60
Friday, Aug 08
10:00 Wholesale inventories mm (%) Jun 0.6 0.5