Yesterday we learned that the much-anticipated Eurogroup meeting to vote on Greece's second bailout had evolved into a mere conference call with sources citing Greece not having the proper "paperwork" ready to go.  Earlier this morning, we learned that some "Euro-zone finance officials are examing ways of delaying parts or even all of the second bailout," according to Reuters and that a proposal t that effect has been circulated.

This is can-kicking at its finest as it potentially pushes the next focal point in the Greek saga BACK TO APRIL, after their elections.  It also casts doubt as to whether or not today's Eurogroup conference call is still going to happen, and  if it does happen, how much can really be resolved.  The "yeah buts" keep coming.  Even if something seems to be resolved, the mere mention of these proposals suggests that markets could be perfectly justified in delaying any meaningful trading of current Greece-related headlines until April's elections are over. 

All of this has markets showing their skepticism, and MBS are a direct beneficiary.  The moderation of what could have been a divergent bullish break in momentum provides a calmer benchmark environment.  MBS don't like volatility in Benchmarks such as Treasuries.  So when something happens to help lock Treasuries into recent ranges, MBS approve, and are able to reasonably keep pace with bond market rallies that they otherwise might underperform to a more noticeable degree.  While it's true that spreads are very slightly wider, indicating a modicum of underperformance, MBS are keeping pace for the most part.

Until the the looming Eurogroup meeting began unravelling yesterday, MBS had been at risk of falling further below key technical levels, effectively confirming a break either below the 103-16 pivot point or the mid point of the long-term, prevailing trend channel (lower teal and center red lines below).  Now today's moves solidify a bounce off the center trend-channel line and a clear re-entry into the 103-16 to 103-29 sideways range that has contained most of the price action since late January.

There's still a chance that we'll get news from a Eurogroup conference call today, but less of a chance of it being a big detractor from the current range, unless its results prove to be very much the opposite of what seems to be the standard-issue news out of Europe concerning the current Greek bailout: almost never ending up as it was originally expected.