Stop me if you've heard this one before.  There's this range in early 2019... It was consolidating.  Then it broke.  Now it's sideways.

Unless you're just joining us for the first time, you've likely had quite enough of all the range-bound discussion.  I know I have.  Yet I must continue to discuss it because it's incredibly relevant and interesting.

How is a sideways range interesting?  This particular version resulted in the narrowest monthly 10yr yield trading range since 1979 (Feb 1- Feb 28).  The longer such a range persists, the more it's telling us about pervasive uncertainty.  The more pervasive the uncertainty, the bigger the implication for the next move.  Bottom line: whenever this range-bound business finally concludes, rates should be on the move  for better or worse.

But what is the range?  Didn't we break out of it 2 weeks ago?

Yes, the consolidation range was broken to the upside on Feb 28th and March 1st.  But as I said at the time and several weeks in advance, the first breakout was never likely to do anything more than adjust the ceiling of the broader, sideways trading range.  Yields found that ceiling despite several pieces of stronger economic data at the time.  A few days later, they found the floor despite an exceptionally weak NFP reading (when yields bounce near potential technical levels despite economic data making an opposite suggestion, it strengthens the case for those technical levels).

The floor and ceiling in question are 2.62 and 2.75 respectively.  Don't expect these to be perfectly firm levels that repel any rally or sell-off.  Rather, these are the narrowest range boundaries in the early 2019 sideways range.  That was already the case before the last 2 weeks and their importance has been reinforced since then.

2019-3-11 open

While there are several major economic reports this week (Retail Sales, Durable Goods, CPI), the most notable feature is its nearness to next week's big Fed Announcement.  Truth be told, I was more excited about this Fed announcement last month.  It feels like we have a much better sense of where they stand now.  Even so, the 2nd half of March could still be the time for a range breakout and the Fed could still inform that process.  Traders may be adjusting their final bets on that process based on how this week's economic data comes out.


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
100-13 : -0-02
Treasuries
10 YR
2.6360 : +0.0110
Pricing as of 3/11/19 9:45AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Mar 11
8:30 Retail Sales (%)* Jan 0.0 -1.2
10:00 Business Inventories (% ) Dec 0.6 -0.1
13:00 3-Yr Note Auction (bl) 38
Tuesday, Mar 12
8:30 Core CPI Year/Year (%)* Feb 2.2 2.2
13:00 10-yr Note Auction (bl)*
Wednesday, Mar 13
7:00 Mortgage Refinance Index w/e 1110.9
7:00 MBA Purchase Index w/e 240.5
8:30 Core Producer Prices YY (%)* Feb 2.6 2.6
8:30 Durable goods (%)* Jan -0.5 1.2
8:30 Nondefense ex-air (%)* Jan 0.1 -1.0
13:00 30-Yr Bond Auction (bl)*
Thursday, Mar 14
8:30 Export prices mm (%)* Feb 0.1 -0.6
8:30 Import prices mm (%)* Feb 0.3 -0.5
8:30 Continued jobless claims (ml) w/e 1.775 1.755
8:30 Jobless Claims (k) w/e 225 223
Friday, Mar 15
8:30 NY Fed Manufacturing Mar 10.00 8.80
9:15 Capacity Utilization (%) Feb 78.4 78.2
9:15 Industrial Production (%) Feb 0.4 -0.6
10:00 1yr Inflation Outlook (%)* Mar 2.6
10:00 5yr Inflation Outlook (%)* Mar 2.3
10:00 Consumer Sentiment Mar 95.3 93.8