In the week just past, bonds managed to extend the already unexpected gains that began on May 6th following a sharp escalation in US/China trade war rhetoric.  Trade-related news continued to be a market mover throughout that two week period, and markets remain susceptible to "aftershock" headlines.  Last Wednesday saw a flare-up in Italy/EU tensions revolving around the country's decision to violate EU budget rules.  In general, risks to EU monetary stability are good for the bond market.  There was limited economic data throughout the week, but logical reactions in general.  That said, the size of the reactions was muted by the market's focus on geopolitical issues.

In the week ahead, data will once again be limited with new and existing homes sales reports being the only notable inclusions during the first 4 days.  Friday brings what would normally be the week's most significant report in the form of Durable Goods Orders, but its impact may be lessened by the fact that markets close early for Memorial Day weekend.  In general, trading runs the risk of becoming increasingly idiosyncratic the closer we get 3.5-day weekends.  This is most easily ascribed to the fact that trader participation quickly begins to dwindle.  Just as in a scientific study, where a lower sample size leads to less conclusive results, so too does a smaller trader population lead to trading levels that may not necessarily be indicative of the broader consensus.

In the bigger-picture technical perspective, bonds are at risk of exiting the 2-week trend of unexpected gains.  The blue/red and green/teal lines in the chart below are both suggesting momentum is overbought in short and medium-term time frames respectively.  Granted, technical studies are not reliable ways to predict the future, but they are telling us that bonds will face at least some technical pressure, all other things being equal.

2019-5-20 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
101-08 : +0-00
Treasuries
10 YR
2.3800 : -0.0130
Pricing as of 5/20/19 9:40AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, May 21
10:00 Existing home sales (ml)* Apr 5.35 5.21
10:00 Exist. home sales % chg (%)* Apr 2.7 -4.9
Wednesday, May 22
7:00 Mortgage Refinance Index w/e 1232.6
7:00 MBA Purchase Index w/e 268.5
14:00 FOMC Minutes *
Thursday, May 23
8:30 Jobless Claims (k) w/e 215 212
8:30 Continued jobless claims (ml) w/e 1.670 1.660
10:00 New home sales chg mm (%)* Apr -2.8 4.5
10:00 New home sales-units mm (ml)* Apr 0.675 0.692
Friday, May 24
8:30 Nondefense ex-air (%)* Apr -0.3 1.4
8:30 Durable goods (%)* Apr -2.0 2.6