Mortgage Backed Securities Overview
The bond market was closed yesterday in observance of President’s Day, but the rest of the week is full of great economic releases.
We will get a good read on inflation with both PPI and CPI as well as a good read on housing with Building Permits, Housing Starts, and Existing Home Sales.
But once again the focus this week will be on the Fed.
There will be a sprinkling of “Talking Feds” throughout the week with Lockhart and Bullard, but Wednesday’s release of the minutes from the last Federal Open Market Committee (FOMC) meeting will be the most closely watched event of the week. This was the first meeting where Janet Yellen presided as the new Chair and it was the meeting that followed that dismal Non-Farm Payroll report. Traders will be focusing on the discussion surrounding the decision to taper and to see if there were any dissenting votes. Also, traders are trying to determine just how resolute the Fed is on their path to taper.
We will also find out when Yellen’s testimony before the Senate will be rescheduled as this event will have an impact on the markets as well.
Empire Manufacturing: This a regional manufacturing report and it was weaker than expected (4.48 vs est of 10.0). This is a very slight positive for pricing but it is just a regional report and that region has been hammered by bad weather conditions.
Total Net TIC Flows for December: Came in -119.6 billion and the prior period was revised downward to -13.0 billion. Not a factor in pricing.
Home Builder Index: Scheduled to have been released at 10:00EST. The market is expecting a fairly strong reading of 56. Generally, this report does not impact bond prices.