We have a holiday-shortened week and a light schedule for economic data.

The bond market will close early on Tuesday at 2:00 EST and be closed on Wednesday in observance of Christmas.

There are no major Treasury auctions this week. The biggest event of the week will be Tuesday morning's release of the Durable Goods Orders. After that point, there will be a skeleton crew of bond traders on duty until next Monday which will lead to light trading volumes for the week.

We received Personal Income and Spending data this morning. Personal Spending matched expectations of 0.5% and Personal Income came in a little lighter than expectations (0.2% vs est 0.5%). Plus Personal Consumption matched expectations. We still have Consumer Sentiment at 9:55EST this morning.

Our "upside" for better pricing is very limited as we are currently trading just below our 10 day moving average which has been a very strong resistance level all month long. It will take a much weaker than expected Consumer Sentiment Index reading (say around 78 or lower) for MBS to break above that resistance level. For the week, look for MBS to trade sideways as we enjoy a "pause" in our longer-term sell off. Durable Goods Orders will be key. If we get a strong reading, MBS will sell off. We will need a surprise to the down-side to see any significant improvement in pricing this week.