Global financial markets were unequivocally still out on holiday breaks yesterday--unofficially in the US and officially in Europe.  There were no major reactions to Geopolitical headlines or any other substantive market movers in the domestic session.  Bond markets ended up very close to unchanged from last week's latest levels and volume totals were the lowest of the year.

Today serves as a better candidate for "first day of the week."  Europe will be back in action, making for the presence of an actual overnight session, which is always a consideration in setting the tone for the domestic session.  We really didn't have an overnight session for all intents and purposes yesterday.

The domestic economic data is more meaningful today, even if it's not something that draws bond market participants to the edges of their seats.  Existing Home Sales is the headliner, and it's expected to continue falling to a 4.55 mln unit annual pace.  Merely being in line with that forecast will look pretty downbeat for the housing sector.  The chart below shows why (today's forecast in red):

Conversely, any 'beat' stands the chance to give the impression that a housing slide could be leveling-off.  Either eventuality is a mixed blessing for MBS watchers as it speaks to a trade-off between rates and industry health (i.e. stronger housing data = good for house, but probably bad for rates).

The week's Treasury auction cycle begins at 1pm with 2yr Notes.  These still haven't shown a propensity to have much of an effect on the longer end of the yield curve--the part that's more analogous to MBS--but a small reaction is possible.