Before last week's stock rout, bonds were stuck in a rut.  For four straight sessions, they hit the highest intraday yields since 2011.  Even after the 3rd biggest stock sell-off since the financial crisis, Treasuries were reluctant to rally in any extreme way.  Take away the worst yields of the preceding 4 days and the post-rally levels last week would STILL have been the highest since 2011.

There's no question that bonds finally acquiesced to stock volatility as a key market mover.  That continued to be the case throughout the week.  The lower section of the following chart shows the difference in magnitude between the two moves as well as the consolidative patterns that both have carried into the current week.

2018-10-15 open

The implication is that this week will be all about resolving these consolidation patterns (the series of higher lows and lower highs often seen in the wake of a big move).  The best candidate to speak to such breakouts--at least from an econ data standpoint--was this morning's Retail Sales data.  But since it's already out, and since neither side of the market had a major reaction, the sense of indecision is only magnified.

The rest of the week brings mainly housing-related reports, with Thursday's Philly Fed being the only notable exception from a potential market-mover standpoint.  None of that data is likely to set the tone, however.  For that, we'll keep looking at stocks until they give us a reason to look somewhere else.


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 4.0
100-07 : +0-03
Treasuries
10 YR
3.1519 : +0.0109
Pricing as of 10/15/18 9:01AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Oct 15
8:30 Retail Sales (%)* Sep 0.6 0.1
10:00 Business Inventories (% ) Aug 0.5 0.6
Tuesday, Oct 16
9:15 Capacity Utilization (%) Sep 78.2 78.1
9:15 Industrial Production (%) Sep 0.2 0.4
10:00 NAHB housing market indx Oct 67 67
Wednesday, Oct 17
7:00 Mortgage Refinance Index w/e 921.2
7:00 MBA Purchase Index w/e 238.0
8:30 Building permits: number (ml)* Sep 1.278 1.249
8:30 House starts mm: change (%) Sep 9.2
8:30 Housing starts number mm (ml)* Sep 1.220 1.282
8:30 Build permits: change mm (%)* Sep -4.1
Thursday, Oct 18
8:30 Philly Fed Business Index * Oct 20.0 22.9
8:30 Jobless Claims (k) w/e 212 214
Friday, Oct 19
10:00 Existing home sales (ml)* Sep 5.30 5.34
10:00 Exist. home sales % chg (%)* Sep -0.7 0.0