Much has been made of tomorrow's European Central Bank (ECB) Announcement, mainly because of its proximity to ECB President Draghi's comments on June 27th.  That's when Draghi said deflation was being replaced by reflation and that economic growth in the Eurozone has more upside risk than downside.  Those are the words of a central banker who is sending up trial balloons for tapering.  

Bernanke sent up similar balloons in March 2013, but they were ignored due to an abrupt shift in economic data in April (and then suddenly recalled in alarming fashion when that data was heavily revised in May).  Markets are much more alert about ECB tapering risks and they've reckoned it's not happening in any sort of sweeping fashion just yet.  Draghi's late June comments threw traders for a loop, but they collected themselves and called his bluff over the past 2 weeks, pushing yields back down to the lowest levels since June 29th.  

Today's trading suggests the "bluff-calling" was a done deal as of yesterday morning.  Reason being: bonds haven't really moved since then.  There was a brief attempt to rally earlier today, but it was quickly unwound as the NYSE session favored stocks above all else.  Bottom line: bond traders are in a neutral position at current levels are are ready to take any of Draghi's potential clues at face value tomorrow morning.  There could be some drama, but bigger drama is likely reserved for the September-December central bank soap opera (ECB tapering?  Fed tapering reinvestments?).


MBS Pricing Snapshot
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MBS
FNMA 3.5
102-28 : -0-02
Treasuries
10 YR
2.2713 : +0.0083
Pricing as of 7/19/17 5:55PMEST

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8:39AM  :  Stronger Housing Data Barely Makes a Dent

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Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Jul 19
8:30 Housing starts number mm (ml)* Jun 1.215 1.155 1.092
8:30 House starts mm: change (%) Jun +8.3 -5.5
8:30 Build permits: change mm (%)* Jun +7.4 -4.9
8:30 Building permits: number (ml)* Jun 1.254 1.200 1.168