MBS Day Ahead: Week's First Meaningful Data Plus Earnings Season in Swing

In the day just passed, bonds traversed a sleepy summertime Monday trading session without much volume or liquidity. That dynamic was somewhat exacerbated by the fact that Japanese markets were closed (which means there was no hub for Treasury trading during Asian market hours). This left incidental tradeflows in control with the day's biggest move seen right after the NYSE Open. In the day ahead, bonds will digest the week's first meaningful economic data in the form of Retail Sales at 8:30am. The Fed referred to the consumer segment as one of the parts of the economy it's NOT worried about. That could make for a bigger reaction if the report is weaker than expected. But any big reaction will continue to fight the "summer doldrums" for financial markets. In short, lighter...(read more)

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