Apart from the one reprice for the better seen earlier today, the late day gains that are currently bringing Fannie 3.5's to 101-23 stand a slight chance of prompting a very small contingent of lenders to reprice for the better.

Why small? A few reasons... First, today's trading range is narrow. We haven't really gained that much despite being in line with the highs of the day. Secondly, tomorrow's anticipated HARP 2.0 details add a layer of uncertainty specifically to the MBS market heading into tomorrow.

Perhaps if anything, this alert is to manage reprice expectations when we're looking at an MBS chart that would normally result in a few more reprices for the better. We might get a few more, but certainly not something to plan on.

Tomorrow morning is the polar opposite of today in terms of economic data releases. Here's the run-down from "The Week Ahead" (linked below):

Producer Price Index - 830am. Core inflation at the producer level is seen at +0.1 pct after last month's rise of 0.2 pctm while the headline is expected to show a bigger swing from last month's 0.8 pct rise to a 0.1 pct decline this month. Focus on the core reading, both for the month-over-month metric as well as year-over-year, which is expected to fall to 6.3% from 6.9%

Retail Sales - 830am. Large drops are expected on the headline (1.1 pct gain last month vs an expected 0.3 pct gain this month) as well as excluding the automotive sector (0.6 pct gain last month vs tomorrow's consensus of +0.1 pct)

Empire State Manufacturing Survey - 830am. Forecast: -2.1, which would be an improvement from the previous reading of -8.48

Business Inventories - 10am. Seen falling from last month's print of 0.5 pct to 0.1 pct

Fed-Speak from Bullard, Williams, and Fisher
Fed Treasury buying: $4.25 to $5.0 bln in the 6-8yr sector

In addition, we're hoping that our date is still on with the release of operational details of HARP 2.0. Upper coupons are certainly getting cold feet in anticipation.

But after all that's said and done, is it enough information to move markets in one direction if European headlines suggest another? That all depends on the size and severity of those hypothetical headlines, but certainly, the wildest possible economic data and HARP 2.0 reaction could scarcely compete with similarly wild EU headlines. Whether or not we get them, and the degree of their "wildness" remains to be seen.

(Reuters) - The European debt crisis is raising the odds of a U.S. recession, with economic contraction more likely than not by early 2012, according to research from the San Francisco Federal Reserve Bank.

While it is difficult to gauge the odds precisely, an analysis of leading U.S. economic indicators suggests a rising chance of a recession through the end of the year and into early next year, researchers at the regional Fed bank wrote on Monday. The risk of recession recedes after the second half of 2012, they found.

New governments in Greece and Italy, with fresh promises to tackle fiscal problems have in recent days, allayed investor concerns about a near-term sovereign debt default in the euro zone, but Europe's debt crisis is far from resolved. The region is facing its worst hour since World War II, German Chancellor Angela Merkel said on Monday.

Although domestic threats to economic growth in the United States are limited, a shock from abroad could derail a fragile recovery.

The weak U.S. economy is more than usually vulnerable to turbulence beyond its borders, as the unexpectedly severe U.S. effects from Japan's devastating earthquake in March demonstrates, the researchers said.

"A European sovereign debt default may well sink the United States back into recession," wrote Travis Berge, Early Elias and Oscar Jorda in the latest San Francisco Fed Economic Letter. "However, if we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013.

The assessment of recession risk is more dire than that of many private economists. A Nov. 4 Reuters poll of primary dealers shows Wall Street economists see a 30 percent chance of a U.S. recession next year, down from 35.5 percent a month earlier.

Perhaps the most striking thing about markets today is the lack of anything striking. Things are quite dull. Headlines are in short supply. Economic data is non-existent. And the world is left to trade the unwinding of a Friday equities rally that perhaps wouldn't have been quite so bullish without the "risk goggles" on. Sure! It seemed like a great idea to bid up equities and European markets on the Italian voting over the weekend, but not so much on this Monday that essentially constitutes "the morning after."

That unwinding process has been generally more favorable to Treasuries than to MBS with the former making progressive gains and the latter still trading in a sideways range. Chalk this underperformance up primarily to increased volatility/hesitation ahead of more specific HARP 2.0 details tomorrow, but expect some opportunistic Fed buying when/if things widen out too much.

The gains that follow would be the first hints at potential price improvements on the day, but we'd expect that like traders, lenders would also be a bit hesitant ahead of tomorrow's hotly anticipated announcement.