There was little to move markets overnight, including the much-discussed death of Kim Jong-Il.  While this amounted to more than a blip on Korea's Kospi, it was a small and passing consideration for the rest of the world

We find ourselves this Monday morning in the familiar position of watching and waiting for news out Europe, meanwhile adjusting/reacting to existing news out of Europe and to a lesser extent, in the US. It could, and probably should be said that after last week, the US Treasury auction cycle plays an important role in determining MBS Prices this week, but even that ostensibly American event is made more interesting by the extent to which foreign accounts may or may not step in to help maintain the aggressive demand that propped up lofty bond prices last week. 

The auction cycle is once again nudged forward by one day, meaning that today kicks things off with the 2yr Note at 1pm (5's and 7's in the next two days). This has been the most boring and uneventful of the core auctions since the Fed adopted their "2013 verbiage" and even then, was never much of an MBS market mover. Before that, NAHB's housing market index hits at 10am It's part of a slew of housing related economic data this week which in general, are more interesting industry-specific anecdotes than market movers. 

There's quite a bit of economic data set for Thursday and Friday, but it will have to compete with waning participation ahead of the holidays as well as the ongoing preference for European news. To that end, the biggest example could be the long-term repo operation tomorrow. Since the ECB naturally can't commit to buying unlimited amounts of Euro zone debt, it can apparently lend out billions of Euros for 3 years so that borrowing countries can simply do it themselves. The actual amount of this 3 year "gimme" tomorrow is as-yet undetermined, but its announcement is a big potential mover for tomorrow, along with the need to prep for 5 yr auction. 

So far, it seems that what little volume there is, is coming out a bit conservatively ahead of these considerations. MBS are down 7 ticks at 102-14 and 10yr yields are up just over 2bps at 1.8749.

Here's a look at the rest of the week's economic data

Time Event Period Unit Forecast Prior


NAHB housing market indx

Dec -- 20     20


2-Yr Note Auction

-- bl 35.0 --

Tue, Dec 20


Housing starts number mm

Nov ml 0.635  0.628


Building permits: number

Nov ml 0.635 0.644


5-Yr Note Auction

-- bl 35.0 --

Wed, Dec 21


Mortgage market index

w/e -- -- 677.0


MBA Purchase Index

w/e -- -- 190.9


Mortgage refinance index

w/e -- -- 3573.7


Existing home sales

Nov ml 5.05 4.97


7-Yr Note Auction

-- bl 29.0 --

Thu, Dec 22


Initial Jobless Claims

w/e k 380    366


Continued jobless claims

w/e ml 3.60   3.603


Corporate Profits (Final)

Q3 % -- +3.0


Real GDP (Q3 Final)

Q3 % +2.0 +2.0


Consumer Sentiment (Final)

Dec -- 68.0 67.7


FHFA Home Price m/m

Oct % -- +0.9

Fri, Dec 23


Build permits Revision

Nov ml -- --


Personal Consumption

Nov % +0.3 +0.1


Personal income mm

Nov % +0.2 +0.4


Core PCE price index mm

Nov % 0.1 0.1


Durable goods

Nov % 2.0 -0.5


Factory ex-transp mm

Nov % 0.4 1.1


Nondefense ex-air

Nov % 1.0 -0.8


New home sales-units mm

Nov ml 0.313 0.307


SIFMA rec early close for Bond Markets - 2:00 PM Eastern