Earlier, we discussed the slightly larger-than-normal data load for a monday morning.  Tomorrow is light by comparison and indeed the lightest day of the week.  After all, the FOMC coming out of the two day meeting on Wednesday tends to be a bit more newsworthy than the mere knowledge of the meeting's inception tomorrow. 

To whatever extent we can turn to this AM's data as a mover of markets, today's price direction makes sense and may even be a bit tame.  Despite the weakness, MBS and tsy's seem to be fighting to hold on to ranges beset by 101 in the former and 3.42 in the latter.  That they're losing that fight at the moment is largely unimportant.

  What IS important is why they haven't been as weak as the data would suggest.  And though that could be a matter of speculation, it likely has something to do with the muted impact of this AM's econ data, both to drive fixed income lower and stocks higher.  The S&P fought for a good portion of the day against Friday's closing price and looks as though as it will struggle to get to 1044+, a minor internal technical price level.

Even though the stock level is in play today and the moderate strength in the afternoon is not helping MBS or tsy's, there's a more fundamental Oz behind the market's curtain.  But until Wednesday, Oz himself isn't pulling the strings.  Rather, volume, reaction to data, and volatility are more muted than they otherwise would be across all major markets ahead of Bernanke (that was Oz, if you didn't catch that...) and the Fed announcement on Wednesday.  Until then, it's not now, nor should it be tomorrow, very surprising to see muted responses to otherwise more suggestive data and the slight predisposition of prices and yields to seek out one of several close-by technical price levels.

As always, with the lows of the day, lenders that haven't repriced or who otherwise didn't come out with an uncompetitive rate sheet would be within their rights for a small reprice for the worse.  In the big picture, that would be relatively meaningless until Wednesday at 2:15...