A 4 tick drop in MBS from 100-24 to 100-20 was about all the excitement the 4.5 could manage this afternoon, and by 5pm, even those insignificant price adjustments had recovered to 100-21+.  It was the same story in tsy's at 3.70+ eased to 3.69+, and stocks stayed under their previous highs.  Even with the condensed week, it's not off to a very exciting start.  Not a BAD start though, so I suppose we should be thankful...

Stocks are influenced from everything from politics to earnings this week, but whatever the true source of strength might be, the freight train can't be denied.  Factoring out Friday's down day, stocks were right back in Thursday's exact same range shortly after the open.

But as can be noted in the bond movements, the stock rally didn't phase us much.  Down 0-2 ticks in MBS, and only marginally weaker than that in the 10yr.  Tomorrow's headline data--PPI--has the ability to send both markets in the same direction for a 2nd day, assuming of course, that turns out to be the key driver.  But at the same 830 time slot, we also get housing starts.  Both reports can be movers, but both can also be underwhelming.  More likely than taking cues from PPI, we'll see FLOWS take over on or shortly after Thursday as the next wave of tsy auctions is announced.  So in the absence of shocking data tomorrow morning, that'll be two days of cruise control to start the week, cashing in tomorrow afternoon if we get some nice gains, and chasing the MBS dragon into thursday morning if tomorrow proves flat, but hyper-vigilant around auction announcement time.