Monday saw a fairly standard-issue "inside day" for bond the two securities we follow most closely: Production MBS (for mortgage rate implications) and 10yr Treasuries (for broader bond market trends).  In both cases, prices and/or yields traded INSIDE the highs and lows from Friday's session.  This generally occurs either on slow, uneventful trading days or when markets are eagerly anticipating some big event and unwilling to commit too much to a move in either direction.  Sometimes, both of those factors are in play and this could be one of those times. 

On one hand, things were simply slow yesterday in bond markets, but we couldn't rule out that some of the containment is with an anticipatory eye on Wednesday's FOMC Announcement.  We might also grudgingly entertain the possibility that the presidential debate could factor into the sideways grind (acknowledging an election as a bond market consideration is a first for us, at least when it comes to domestic elections), but we're not really pleased with that assessment (and never have been) as much as we're simply rattling off another possibility.  

Today's offering of data and events isn't much better than yesterday's, with only the relatively inconsequential Richmond Fed Manufacturing Index at 10:00am and the completely inconsequential 2yr Treasury Auction at 1pm.  There's no scheduled Fed "Twist" buying from 10:15-11:00am because there is, in fact, "Twist Selling" of  2.5-3yr Treasuries.  When we're talking about maturities that short in an era where the ongoing FOMC verbiage conveys "low rates through mid 2015," such things are of little consequence to broader bond market movements.  As such, it's another day without guidance, but it should be interesting to see whether bond markets keep following stocks or if they diverge into some sort of pre-FOMC trading pattern with Wednesday's Fed announcement looming.

MBS Live Econ Calendar:

Week Of Mon, Oct 22 2012 - Fri, Oct 26 2012

Time

Event

Period

Unit

Forecast

Prior

Tue, Oct 23

13:00

2-Yr Note Auction

--

bl

35.0

--

Wed, Oct 24

07:00

MBA Purchase Index

w/e

--

--

200.9

07:00

Mortgage refinance index

w/e

--

--

5452.9

10:00

Monthly Home Price mm

Aug

%

--

0.2

10:00

Monthly Home Price yy

Aug

%

--

3.7

10:00

New home sales-units mm

Sep

ml

0.385

0.373

10:00

New home sales chg mm

Sep

%

--

-0.3

13:00

5-Yr Treasury Auction

--

bl

35.0

--

14:15

FOMC Announcement

N/A

%

--

--

Thu, Oct 25

08:30

Durable goods

Sep

%

7.0

-13.2

08:30

Initial Jobless Claims

w/e

k

370

388

10:00

Pending sales change mm

Sep

%

+2.0

-2.6

13:00

7-Yr Note Auction

--

bl

29.0

--

Fri, Oct 26

08:30

GDP (3rd Quarter, Adv)

Oct

pct

+1.8

+1.3

09:55

U.Mich sentiment

Oct

--

83.0

83.1

* mm: monthly | yy: annual | qq: quarterly | "w/e" in "period" column indicates a weekly report

* Q1: First Quarter | Adv: Advance Release | Pre: Preliminary Release | Fin: Final Release

* (n)SA: (non) Seasonally Adjusted

* PMI: "Purchasing Managers Index"