Bond markets begin the week in slightly worse territory than Friday's after Greek parliament voted to approve the austerity measures requisite for the country's bailout funds.  But in and of itself, the passing of austerity doesn't guarantee the release of Greece's next aid tranche.  That fate is set to be decided at a Eurogroup meeting on Wednesday.  Incidentally, a similar meeting stood out as an important economic event last week, but Greece was unable to reach a consensus on requisite austerity measures.  As a results, this week's meeting was announced as a follow-up, ostensibly allowing Greek political leaders an opportunity to get on the same page.  (As a bit of an aside, recall that Greece's PM Papademos last week said that any members of the government who didn't support austerity measures could not remain in the government.  That's one way to get on the same page).

In conjunction with determining Greek bondholder's private sector involvement, this meeting is shaping up to be the focal point of the week, with the assumption being more pronounced weakness ahead for bond markets if the deal manages to get approved.  The parliament vote, which merely "keeps hope alive" as it were, has already lifted stock futures to their highs of the year and brought 10yr yields back over 2%, currently 2.2bps higher from Friday at 2.005.  MBS are moderately lower, just on the low side of Friday's range, down 3 ticks at 103-11. 

Vying for the attention of market participants will be a robust week of domestic economic offerings with Monday standing as an exception to an otherwise busy calender.  There are no significant pieces of economic data set for release today, so we're left to watch the unfolding drama that may arise over the Greek austerity approval and anticipatory buzz over Wednesday's voting.  

The first report of the week, Retail Sales tomorrow morning at 8:30 AM Eastern, is also the most important in terms of domestic data.  We could well imagine some tough moments ahead for bond markets this week if the Greek deal is approved AND economic data on the home-front is on the strong side.  Whether or not those "tough moments" mean that the 10yr benchmark rises above last week's high yields near 2.08 remains to be seen, but we'd certainly be prepared for that possibility.

MBS Live Econ Calendar:

Week Of Mon, Feb 13 2012 - Fri, Feb 17 2012

Time

Event

Period

Unit

Forecast

Prior

Tue, Feb 14

08:30

Retail sales mm

Jan

%

0.7

0.1

08:30

Retail sales ex-autos mm

Jan

%

0.5

-0.2

08:30

Export prices mm

Jan

%

0.2

-0.5

08:30

Import prices mm

Jan

%

0.3

-0.1

10:00

Business inventories mm

Dec

%

0.5

0.3

Wed, Feb 15

07:00

Mortgage market index

w/e

--

--

810

07:00

Mortgage market: change

w/e

%

--

7.5

07:00

Mortgage refinance index

w/e

--

--

4500.7

07:00

Refinancing: change

w/e

%

--

9.4

07:00

MBA Purchase: change

w/e

%

--

0.1

07:00

MBA 30-yr mortgage rate

w/e

%

--

4.05

07:00

MBA Purchase Index

w/e

--

--

181.9

08:30

NY Fed manufacturing

Feb

--

15.0

13.48

09:00

Overall net capital flows

Dec

bl

--

59.8

09:00

Foreign buying, T-bonds

Dec

bl

--

54.0

09:15

Capacity utilization mm

Jan

%

78.6

78.1

09:15

Industrial output mm

Jan

%

0.6

0.4

10:00

NAHB housing market indx

Feb

--

26

25

Thu, Feb 16

08:30

Producer prices mm

Jan

%

0.4

-0.1

08:30

Producer prices, core mm

Jan

%

0.2

0.3

08:30

Producer prices, core yy

Jan

%

2.7

3.0

08:30

Initial Jobless Claims

w/e

k

365

358

08:30

Continued jobless claims

w/e

ml

3.5

3.515

08:30

Housing starts number mm

Jan

ml

0.675

0.657

08:30

Building permits: number

Jan

ml

0.680

0.671

Fri, Feb 17

08:30

Consumer Prices mm

Jan

%

0.3

0.0

08:30

Core CPI mm

Jan

%

0.2

0.1

08:30

Core CPI yy

Jan

--

2.2

2.2

10:00

Leading index chg mm

Jan

%

0.5

0.4

08:30

Real Earnings

Jan

%

0.1

0.5