So far, today has been a serious snoozer for bond markets.  Volume is low and volatility is all but absent as 10yr notes and production MBS continue trading in the same ranges seen this morning.  There was a brief moment of exception to this fact on the announcement that Greece's debt swap had formally started, but this was limited to 10yr yields only, which have operated between 1.99 and 1.97 all day.  MBS have been exclusively within 103-13 and 103-18 in Fannie 3.5's.  The chart below from MBS Live shows the brief foray outside the range for 10yr yields.

(source: MBS Live Dashboard)

It should be noted that the true break in the range came not on the announcement itself, but on IIF's Dallara commenting that Greece's potential use of collective action clauses raises concerns for other sovereign debt in the EU.  Yields bounced back moments later when Dallara said that there has been no decision to activate those CACs yet.  (Note: Collection Action Clauses in this situation would allow a 66% majority of Greece's private bond-holders to accept the already-agreed-upon debt swap terms that would then be applicable to all of Greece's private bond-holders).  

Despite this news, volume barely budged in response.  Markets are either all "Greeked-out" for the week, or would need something with more punch to stir up a more noticeable response.  As far as the other data, forget about it...  We've heard from all four of our Fed speakers now, all are little-changed from previous stances (see this morning's Day Ahead for those expectations).  Consumer Sentiment printed slightly better than expected, no one cared.  New Home Sales beat the consensus but came in lower than the upward revision from the previous report.  No one cared.  Really, the only volume of the day so far has been the brief and muted whipsaw around the end of the Fed's scheduled buy-backs in the long end.  

For the record, we'd be just fine with a continuation of sideways momentum at current levels.  It seems like it will take a significant piece of news to push us off that course--either that, or we could see some erratic price action later in the session as liquidity/participation get to be more of an issue as they sometimes can be on Friday afternoons.  Whether that would be positive or negative for MBS, it wouldn't be meaningful movement in the big picture, even though some jumpier lenders have been known to reprice on such occasions.  We'll update you if we see such movement.