Last week was relatively impressive and perhaps somewhat surprising in terms of bonds' ability to rally in the absence of overt fundamental motivation.  As we discussed, the covert motivation was/is largely one of trading positions (i.e. shorts covering).  Speaking of things "we discussed," there's also that post-NFP conversation about rally momentum setting the bond market up for a selling opportunity.  If short positions have covered and trading levels are starting the week confirming a bounce at recent low yields, is this the selling opportunity?

20210614 open.png

That may depend on the Fed.  We're less worried about what they change in terms of policy and more interested in verbiage changes, dot plots, and the invariable update on whether or not the tapering discussion has evolved.  Is it still something they're "talking about talking about?"  Or has actual talking begun?  If so, is the notion of adjusting the MBS/TSY ratio on the table?  

We're waiting until Wednesday afternoon for the Fed.  Between now and then, Monday will give us an idea of where the bond market's head is at.  Tuesday will give us an idea of how interested markets are in econ data this week as Retail Sales will be out at 8:30am.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.0
101-02 : -0-05
Treasuries
10 YR
1.4720 : +0.0100
Pricing as of 6/14/21 9:20AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Jun 15
8:30 Core Producer Prices YY (%)* May 4.8 4.1
8:30 Producer Prices (%) May 0.6 0.6
8:30 Retail Sales (%)* May -0.7 0.0
8:30 Core Producer Prices MM (%)* May 0.5 0.7
8:30 NY Fed Manufacturing Jun 22.00 24.30
9:15 Industrial Production (%) May 0.6 0.7
10:00 NAHB housing market indx Jun 83 83
10:00 Business Inventories (% ) Apr -0.1 0.3
Wednesday, Jun 16
7:00 MBA Purchase Index w/e 262.1
7:00 MBA Refi Index w/e 2869.2
8:30 House starts mm: change (%) May -9.5
8:30 Export prices mm (%) May 0.8 0.8
8:30 Import prices mm (%) May 0.8 0.7
8:30 Housing starts number mm (ml) May 1.630 1.569
8:30 Build permits: change mm (%) May -1.3
8:30 Building permits: number (ml) May 1.730 1.733
10:30 Crude Oil Inventory (ml) w/e -2.036 -5.241
14:00 FOMC rate decision (%)* N/A 0.125 0.125
Thursday, Jun 17
8:30 Philly Fed Business Index * Jun 30.0 31.5
8:30 Jobless Claims (k) w/e 359 376
8:30 Continued Claims (ml) w/e 3.430 3.499
10:00 Leading index chg mm (%) May 1.3 1.6