It remains the case that Thursday is the focal point of the week, with European Central Bank (ECB) President Mario Draghi set to tell reporters how far away we are from a tapering announcement.  Tapering is understandably a highly-charged topic, given how it played out in the US in 2013.  Draghi is aware of the damage to financial markets and financial markets are aware that Draghi's aware.  

As such, they aren't expecting him to carelessly obliterate global bond markets.  In fact, they're not expecting him to make much of a firm indication about what's going to happen in the future just yet--at least not in terms of actual dates or dollar (Euro amounts).  In other words, he's increasingly seen as threading the needle that keeps tapering on the table, but that causes minimal panic in terms of financial conditions--essentially the way Bernanke would have done it if he could have observed how markets would have reacted the Fed's communications in May/June 2013.

As traders have been pondering these potential outcomes, they've had to ask themselves if the last visit to 2.40% in 10yr yields marked an intermediate ceiling.  Some felt it was a bit too soon to consider the ceiling being hit, because they were looking for 2.42% as the official technical target.  But as today opens in positive territory, it is on its way to being the 6th day in the past 7 to close at lower yields--a fairly definitive reversal in momentum from the previous trend that saw 7 out of 8 trading days spent moving to higher yields.

As this process unfolds, we can keep an eye on technical levels to gauge how serious bond markets are about "leading-off" ahead of Thursday's central bank announcements (the Bank of Japan is also releasing a policy update, but that's expected to play a relatively smaller role next to the ECB announcement).  If 10yr yields are breaking below 2.27% (current intraday low is 2.275), the more we can conclude that we're seeing a lead-off based on underlying bullishness among bond traders.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
102-27 : +0-05
10 YR
2.2838 : -0.0252
Pricing as of 7/18/17 9:10AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Jul 18
8:30 Import prices mm (%)* Jun -0.2 -0.3
8:30 Export prices mm (%)* Jun 0.0 -0.7
10:00 NAHB housing market indx Jul 67 67