The Week of QE3?

With the political conventions over and Friday’s disappointing Jobs number weighing on investors, markets are about even at today’s open.  It’s a busy week with $66 billion in bond auctions, the German high court decision limiting the ECB bond buying on Wednesday, the Fed statement on Thursday,  and ending the week with CPI, Retail sales, and Consumer Sentiment on Friday.  According to some economists surveys, the probability of more Fed intervention is above 50%.  mortgage bonds are holding the gains from Friday at the moment.  However, QE announcements  of the past have had a negative effect on bonds immediately after, so we will lean towards a locking bias before Thursday’s announcement.