It's all well and good to talk about the economic calendar or the Treasury auction cycle as if it were some bygone era where such things had the same impact that they once did.  But the three rules of the current epoch are Europe, Europe, Europe!  How else is the overnight session boasting high 1.3's in 10yr yields?  How else have we maintained rates this low for this long?  We're not dealing with a stagnant domestic recovery, to be sure...  We tried that and it resulted in 2.06% 10yr yields at it's very worst and most panic-driven moment.

Do the domestic issues play into the current strength in bond markets?  Certainly!  Fed policy is still a big piece of the pie and one that we're not quick to overlook with another FOMC announcement due out next week.  Indeed, there was a Wall Street Journal piece out yesterday that mostly reiterated what we already know from paying attention to Fed speakers.  But the fact that it was a Hilsenrath piece (well known mouth-piece for the Fed) tends to get markets' hopes up.  (read more)

Additionally, the auction cycle becomes slightly more important today considering that it could be somewhat informative to see how markets take down 5yr notes--much more meaningful than 2's, but not as much as 10's--well into their all-time low yields.  The morning data is a relative non-event, but germane to mortgage markets.  MBA Apps will be out at 7am as usual and 3 hours later, New Home Sales will wow us with another + or - headline rendered meaningless by the wide margin of error.  5yr Auction at 1pm.

All that said, it continues to be Europe that stands the best chance of nudging things meaningfully in one direction or another.  To that end, we'll get various pieces of economic data in the overnight session, including an important business climate survey in Germany and Italian consumer confidence.

MBS Live Econ Calendar:
Week Of Mon, Jul 23 2012 - Fri, Jul 27 2012