In the week just passed, the first 4 days (and especially Tue/Thu) served as the scene for a breakout from the previous trend (seen in the yellow lines on today's chart).  Investors eagerly awaited Powell's congressional testimony, with bonds leading off toward higher yields in advance (Tuesday).  When Powell's prepared speech hit the wires (Wed), bonds took some solace, but Thursday's slightly stronger CPI report and terrible 30yr bond auction prompted heavy selling.  By Friday, however, yields were able to maintain the same ceiling for 2 days in a row at 2.15%.

In the week ahead, we'll continue assessing the 2.15% ceiling (hit again overnight) for support.  After the overnight bounce, we're starting the domestic session roughly 4 bps lower.  If 2.15% does end up acting as a firm ceiling here, it wouldn't necessarily be inconsistent with the recent range breakout.  It would just mean that the resulting shift in momentum was short and shallow.  Indeed, short-term momentum metrics are already 'oversold.'  Longer-term momentum still has room to run (green/teal lines below), but they definitely don't make it all the way their every time a selling-spree takes root.

2019-7-15 open

In terms of the week's calendar, tomorrow's Retail Sales data is likely the headliner.  Last week, Powell reiterated the Fed's strong impression of the consumer in contrast to weaker business confidence.  Therefore, any meaningful crack seen forming in consumer spending would be a big deal.  Friday's Consumer Sentiment data is important for the same reason.  Low volume and light liquidity are also potential market movers as we traverse peak vacationing season.


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 3.0
100-14 : +0-01
Treasuries
10 YR
2.1100 : +0.0040
Pricing as of 7/15/19 9:09AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Jul 15
8:30 NY Fed Manufacturing Jul 2.00 -8.60
Tuesday, Jul 16
8:30 Retail Sales (%)* Jun 0.1 0.5
8:30 Import prices mm (%)* Jun -0.7 -0.3
8:30 Export prices mm (%)* Jun -0.2 -0.2
9:15 Capacity Utilization (%) Jun 78.1 78.1
9:15 Industrial Production (%) Jun 0.1 0.4
10:00 NAHB housing market indx Jul 64 64
10:00 Business Inventories (% ) May 0.4 0.5
Wednesday, Jul 17
7:00 MBA Purchase Index w/e 275.6
7:00 Mortgage Refinance Index w/e 1799.7
8:30 House starts mm: change (%) Jun -0.9
8:30 Housing starts number mm (ml)* Jun 1.261 1.269
8:30 Building permits: number (ml)* Jun 1.300 1.299
8:30 Build permits: change mm (%)* Jun 0.7
Thursday, Jul 18
8:30 Philly Fed Business Index * Jul 5.0 0.3
8:30 Jobless Claims (k) w/e 215 209
10:00 Leading index chg mm (%) Jun 0.1 0.0
Friday, Jul 19
10:00 5yr Inflation Outlook (%)* Jul 2.3
10:00 1yr Inflation Outlook (%)* Jul 2.7
10:00 Consumer Sentiment Jul 98.6 98.2