UMBS up 9 bps on the open.  At least it’s green.  S&P Futures up 12.75 Stocks were buoyed by earnings optimism as traders looked ahead to a busy week for company results. The yen rebounded after dropping to its lowest in 34 years.

With Apple Inc. and Amazon.com Inc. scheduled to report in the next few days, investors will be hoping for more evidence that big technology profits can keep propelling stocks. S&P 500 futures added 0.3% on Monday. Tesla Inc. jumped 8% in premarket trading after clearing hurdles to introduce its driver-assistance system to China.

Markets don’t expect the Fed to make any changes to the Fed Funds rate, however the language of the press release will be critical, especially if it refers to risks to the upside on inflation which would open the door for future rate hikes.

Aside from the Fed meeting, we will get a lot of important economic data with house prices on Tuesday, ISM data, and the jobs report on Friday.

The problem of high house prices is a knotty one, which was driven by bad economic and monetary policy. We printed a lot of money, following the typical Great Depression / Great Recession playbook. That money went into real estate speculation.

Now some politicians are trying to pin the blame elsewhere, blaming professional real estate investors. They want to force investors to sell their portfolio to families. They blame the Blackrocks of the world for driving up home prices. The thing is, the vast majority of rental properties are owned by people with 1 – 9 properties.

Considering the volatility that may lie ahead, Monday ended up being a calm and decent start to the week.  The ostensible overnight headwind was the rumored currency intervention by the Japanese government.  In the past, this has caused heavy selling in Treasuries, but that wasn’t the case.  As such, this wasn’t really a headwind.  The more legitimate challenge came in the form of higher borrowing estimates from Treasury this afternoon.  Bonds actually did a good job of taking that news in stride, but nonetheless moved to weaker levels.  It was a bigger problem for MBS due to the way they relate to the Treasury yield curve these days.

The resilience in spite of increased Treasury borrowing was a welcome sight on Monday, but it doesn’t change the highly data dependent nature of the week.  On that note, Wednesday is when things ramp up (higher risk, higher reward beginning on Tuesday afternoon).

UMBS closed the day up 7 bps at 99.44