Personal Consumption Expenditures is getting ready to go on stage tomorrow at 830am, and is asking if it really has to follow the acts seen today. In other words, Debt Ceiling headlines, especially those relating to tonight's expected vote(s), are likely to dominate the market's focus. That said, the exceptionally weak ISM data today was no slouch as far as market movers are concerned. So any major deviation in the data could still shake things up. That's the sole piece of scheduled economic data tomorrow. For a look at the rest of the week as well as the consensus estimates, see the following link:

"Almost too quiet..." Movie cliches have seldom so aptly applied to MBS. Despite stock markets bouncing back to recover a significant portion of today's day-over-day losses, MBS and 10yr notes have maintained an almost eerie stability, trading far flatter than most days, not the sort of thing we'd expect on a day where we're hitting best levels of the year. One hypothesis to explain this behavior lies in technical analysis. After all... It is fairly common to see markets rely on technical levels for guidance when this much uncertainty is present. From the late 2008 lows to the "re-crash" 2010 lows in 10yr yields, there's a trendline that technicians have been eyeing as a probable zone for a triple-dip in interest rates, increasingly so since bouncing off it's counterpart support trend in early 2011. The 2.72 lows in 10yr yield this morning are very close to that lower boundary. MBS did their best to keep pace earlier and now are perhaps doing a better job of that as things have settled down. Fannie 4.0's are currently in their same 4 tick range, up an eighth of a point on the day at 101-30. 10yr yields are at 2.74. Volume is high, but not record-breaking. But we'd expect volume and directional movements to pick up as more debt-ceiling voting info becomes available.

(Reuters) - U.S. Vice President Joe Biden, emerging from a 2 1/2-hour meeting with Democrats in the House of Representatives, predicted a debt limit increase bill will pass Congress. "I am confident that this will pass," Biden told reporters. Saying he went to Capitol Hill to explain the deficit reduction and debt limit increase legislation he helped to broker, Biden added that under different circumstances "we would be talking about job creation, infrastructure (investment)." (Reporting by Rachelle Younglai)

(Reuters) - Are you tired of all the stories on Europe's financial crisis and American politicians' endless bickering about debt and deficits? Are you tired of weekends of hectic negotiations as policymakers rush to cobble together some agreement before markets open? If you are, you are not the only one. Millions of people, including stressed-out policymakers on both sides of the Atlantic, wish to put these issues behind them. Unfortunately, despite many announcements, they are unable to do so decisively, and for good reason. So we better understand why, if we want to minimize the risk of collateral damage and unintended consequences. To do so, you need only remember one rather clumsy phrase: "safe de-levering" (also known to some as "safe de-leveraging"), or the lack thereof. Consider please each word, starting with the second one. De-levering refers to the rehabilitation of balance sheets that have gotten over-indebted to such an extent that they are unsustainable going forward. The contributing causes are usually numerous and many years in the making.

Charts of MBS, Treasuries, and Stocks all have taken on that familiar "wait and see" aspect that we tend to see leading up to an expected market mover. Things are a bit different in this case considering the market mover in question is not merely a singular event or information release, and neither is it much of an objective affair. Headlines surrounding the debt debate vote are currently popping like fireworks. When the first lit up the sky, there were oooh's and ahhh's, but this is like the middle of the show where nothing too dramatic is happening. At some point though, the pace and/or intensity will pick up, and eager audiences will begin to wonder if the grand finale is coming. As you may know, that's not always an easy thing to judge until AFTER it's already happened. But until then, things seem almost a bit too calm with Fannie 4.0's holding onto roughly a 4/32nds range between 101-27 and 101-31, currently up 12 ticks on the day at 101-29. 10yr yields look to have met resistance at 2.72 and S&P's perhaps support at 1275.

(Reuters) - Raul Grijalva, who heads a group of liberal Democrats in the U.S. House of Representatives, said on Monday he expects most members of his progressive caucus to vote against a debt ceiling deal crafted by Republican and Democratic leaders. "We're going to meet at 2 o'clock to try to have a position from the caucus as a whole but, individually, I would suggest a majority of the progressive caucus members are going to vote No," Grijalva told Reuters Insider. He heads the 74-member Congressional Progressive Caucus in the 435-seat House. His comments came as senior Democrats were lobbying lawmakers to support a more than $2 trillion deal that includes no tax increases and deep spending cuts. (Reporting by Reuters Insider)

Including reprices for the better, C30 loan pricing has rallied on average by 38.5bps today. This follows a 61bp improvement on Friday. We're now looking at the strongest pricing of the year, although some lenders have been slower than others to award improvements. Yes, extra margin has indeed been baked into rate sheets, but don't jump to conclusions on the reasons why. This isn't necessarily a factor of "greedy" lock desks. Secondary wants extra business as much as loan originators need it. Unfortunately when volatility picks up in the MBS market, managing pipeline fallout becomes a bigger challenge and hedging gets more expensive. These added costs are passed down to consumers...

(Reuters) - The House of Representatives will vote first on a bill to raise the government's debt limit, possibly in the evening on Monday, a House Republican aide said. If it passes, that would leave the Senate to then sign off on the measure and send it to President Barack Obama to sign it into law. Representative Tom Cole, one of the vote counters for House Republicans, told reporters he expects the measure to pass the House. "I expect us to be able to move this with a very strong vote. We may need a few votes from the other side," Cole said. (Reporting by Richard Cowan and Dave Clarke)

Benchmark bonds and "rate sheet influential" MBS coupons are holding onto and even extending the morning rally. New year-to-date bond yield lows and MBS price highs have been set. Reprices for the better are either already in progress or will soon be awarded

Bond Markets may be in the headline, but the most striking story is in stocks, which have fallen much more sharply on a relative basis. The S&P is down to 1281, nearly a 30 point drop, and in line with the morning's previous lows. Stocks had staged a bit of a bounce attempt after the steepest losses of the morning and bond markets weakened slightly at the same time. But just as stocks are back to their lows, bonds are back to their best levels. For MBS, that's 101-30 in Fannie 4.0's and 2.722 in 10yr notes. Rate sheets have been slow in arriving this morning, but this turn of events where MBS and Treasuries aren't retracing much of their gains this morning is a positive sign for significant improvements.