Welcome!  Here is a safe haven from all of the eclipse talk.  It won't be mentioned at all in this article.  Never mind that it's in the title and the first 3 sentences, because we're about to move on.

Bond markets begin another "summertime" week where "summertime" refers not only to atmospheric seasonality but also to changes in market environment.  We've talked about this ad nauseum recently--largely because it's summer and the seasonality is one of the more interesting features of bond trading at the moment.  And yes, that's like saying that the most interesting thing about a sloth is how slow it moves.  

If you're interested in getting caught up on some of this "summertime" stuff, Friday's Day Ahead went into greater detail.  Thursday's wasn't bad either.

Unlike the average summertime week, the current week ends with an event that has had varying levels of impact on bond markets with some examples being incredibly significant.  We're talking about the Fed's Jackson Hole symposium.  You might see the word "confab" used to describe the event as well.  This apparently references "confabulation"--a word no one knows or uses, but that was all the rage several years ago.  We've moved on to "symposium" these days, but in a few years it will probably just be the "Once Annual No-Tie Friday, Wine and Cheese, Meet and Greet For Central Bankers."  

Actually, we'll still probably see more than a few suits and ties, if we deign to tune in this year.  But why the attitude of resignation?

Jackson Hole used to be an event that had the potential to serve as an early indication of upcoming monetary policy changes.  It's informal nature lent itself to more candid remarks--especially from the Fed Chair.  While that remains a possibility, I'm not sure what Yellen could say that we don't already know.  They're likely to begin tapering reinvestment purchases in September, and are about 50/50 on hiking again in December.

What about Draghi?  European Central Bank (ECB) President Mario Draghi will be in attendance this year, and even I had entertained the possibility that Draghi would drop a hint about the ECB's September meeting.  But last week, "sources" (gotta love them) say that Draghi will punt on any questions about the future, and simply maintain that the September meeting has yet to take place.  In other words, anyone hoping for an early read on ECB tapering potential will just have to wait 2 weeks until their next meeting/announcement.

Where does that leave us, then?  Somewhere in the middle of the yellow lines in the chart of 10yr yields below, and hopefully not bouncing too hard on the teal lines like we did in April.  Anything inside the yellow lines and anything other than a hard bounce (or massive break?) of the teal lines is completely forgettable.

2017-8-21 open


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
103-11 : +0-02
Treasuries
10 YR
2.1869 : -0.0071
Pricing as of 8/21/17 9:54AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Aug 22
9:00 Monthly Home Price mm (%) Jun 0.4
9:00 Monthly Home Price yy (%) Jun 6.9
Wednesday, Aug 23
7:00 Mortgage Market Index w/e 419.1
7:00 Mortgage Refinance Index w/e 1455.9
7:00 MBA Purchase Index w/e 233.8
10:00 New home sales chg mm (%)* Jul 0.3 0.8
10:00 New home sales-units mm (ml)* Jul 0.612 0.610
Thursday, Aug 24
8:30 Initial Jobless Claims (k) w/e 238 232
8:30 Continued jobless claims (ml) w/e 1.950 1.953
10:00 Existing home sales (ml)* Jul 5.57 5.52
10:00 Exist. home sales % chg (%)* Jul 0.9 -1.8
13:00 5-Yr Note Auction (bl)*
Friday, Aug 25
8:30 Nondefense ex-air (%)* Jul 0.3 0.0
8:30 Durable goods (%)* Jul -6.0 6.4