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MBS   +4/32 @ 103.17      10 Yr T    +4/32 @ 2.1360      DOW  -105@ 15070

 

It was another volatile session as shifting investor expectations for Fed policy drove MBS higher early in the session and then lower. Today's economic data had little impact. Consumer Sentiment dropped to 82.7, below the consensus of 84.0.

Without a doubt, the big story next week will be Wednesday's Fed meeting. While expectations are low that it will take place Wednesday, we are at the point where the announcement that the Fed will taper its bond purchases could come at any meeting. Even hints about the timing likely would cause a large reaction. The most significant economic data will be Tuesday's CPI inflation report. The Consumer Price Index (CPI), the most closely watched monthly inflation report, looks at the price change for those finished goods which are sold to consumers. Housing Starts will also be released on Tuesday. Existing Home Sales will come out on Thursday. Philly Fed, Empire State, and Leading Indicators will round out the schedule.