While it's more likely that current gains in MBS will result in lenders releasing their first rate sheet of the day with improved pricing over Friday, lenders that priced at 9:20am or before are currently seeing price levels that could constitute reprices for the better assuming current levels are sustained. The longer they are sustained and/or the higher they go, the higher the reprice probability. FNCL 4.5's are currently 10 ticks up on the day at 102-06. Benchmark 10's continue to rally as well, currently 5bps better on the day at 3.3540.

(WSJ)—European finance ministers will meet in Brussels Monday and Tuesday to discuss the fine print of a deal covering the euro zone's bailout funds after the currency area's leaders vaulted low expectations to secure a crucial agreement early Saturday. Following a rancorous discussion, the leaders agreed to expand the euro zone's current bailout capacity to €500 billion ($694.9 billion), the figure leaders originally promised last year, from just over €300 billion now. They also pledged to establish a new €500 billion permanent bailout fund in 2013. That, together with most of the rest of the agreement, had been resolved by finance ministers in recent months or widely previewed First, the leaders agreed that the bailout funds could buy bonds directly from governments, in the so-called primary market. More significantly, they rejected the option of buying bonds from investors who currently hold them, that is, in the secondary market. The second new detail was an agreement in principle that interest rates charged to countries for bailout loans should be lowered. This is a substantial turnaround from a year ago, when, at Germany's insistence, the euro-zone leaders agreed that interest rates should "not contain any subsidy element." Also agreed by the leaders, as expected, was a pact to improve the competitiveness of the euro zone's more-fragile economies, though in a form weaker than the version first aired by France and Germany. The leaders additionally agreed to the so-called 1/20th rule, under which governments with public debt above 60% of gross domestic product would commit to reducing it to that threshold steadily over 20 years.

After opening lower this morning, stocks rose and fell back to their low opening levels. Bond markets displayed strong correlation with stock movements as we might expect on a day without economic data. 10yr notes are down to 3.362 and FNCL 4.5's are up 8 ticks on the day at 102-03. It's probable that the stock lever will continue to be reasonably connected today unless stocks go much lower, in which case bonds would probably be reluctant to follow.

(WSJ) - The Bank of Japan jumped into action Monday to temper the economic blow from the earthquake, tsunami and nuclear emergency that hit northern Japan, doubling the size of its asset-purchase program and pouring a record 15 trillion yen ($183.17 billion) into money markets to ease liquidity concerns. "What we were most concerned about was the possibility that increases in anxiety and risk-aversion moves would negatively affect the real economy, so we judged it appropriate to mainly boost purchases of risk assets," BOJ Gov. Masaaki Shirakawa said after the bank's policy board meeting, which was cut to one day from two because of the crisis. The board boosted its purchases of riskier financial assets, such as corporate debt, exchange-traded funds and real-estate investment trusts, by a total of 3.5 trillion yen. It also will buy an additional 1.5 trillion yen of government debt. That doubles the size of the central bank's asset-purchase facility—part of a temporary fund established on the bank's balance sheet—to 10 trillion yen. The BOJ also has a program under the fund to provide 30 trillion yen in three- and six-month loans at 0.1% interest. The BOJ's asset-purchase program is unusual among central banks since it includes riskier assets such as corporate bonds, exchange-traded funds and real-estate investment trusts. According to a BOJ statement, board member Miyako Suda voted against the move because she approved of buying risk assets, but not government debt.

We have been working on a technical issue with the charts on the dashboard this morning caused by Daylight Savings Time and the problem is mostly resolved. If you're chart is still displaying 3/10, press CTRL+F5 to apply the update. Please note, however, that although today's prices are updating correctly in the table, the charts are displaying erratically. Depending on when you refresh, certain chunks of time may be missing. We're looking for them! And will let you know when we find them. Thank you for your patience.

Newswires have been dominated by concerns over Japanese nuclear reactor damage from last week's earthquake. The Nikkei is down over 6% while domestic futures are only moderately lower (S&P around 6 points). Rates are lower as well with the 10yr nearly 3 bps better at 3.375. FNCL 4.5's are 6 ticks better at 102-01. There is no economic data today although the Fed will be buying an estimated 6.5-8.5 billion in treasuries with maturities between 7 and 10 years.