Just when you thought rates were bouncing higher after hitting 6 month lows, the new week begins with bonds re-staking a claim to the recent, stronger range in July/Aug. 10yr yields are back in the 1.2's, and MBS are at the best levels in more than a week.

Most everyone is tired of pandemic-related news, but it continues to be the key source of motivation for the economy and the bond market whether directly or indirectly.  The Fed's rate-friendly policy stance is another manifestation of covid's economic impacts.  And just when the Fed is finally getting close to dialing back that policy, the delta variant brings renewed concerns.  Bonds are siding with the delta variant until and unless it proves to have less of an impact than case counts suggest.

Data is fairly light this week, but there are a few big ticket events.  First up will be July's Retail Sales numbers on Tuesday morning.  Economists see the headline falling by 0.2% after a 0.6% gain in June.  Then on Wednesday, the Fed releases the minutes from its most recent meeting (3 weeks ago).  These will help se the stage for Powell's Jackson Hole speech at the end of the month which will, in turn, set the stage for tapering prospects this fall.  Of course, the Fed will be the first to admit that a resurgence in the pandemic will put the brakes on tapering goals--something we already know they discussed at the last meeting.

Long story short, it's still all about covid and it's still anyone's game.