*** 07:50 - FED'S DUDLEY SAYS RECOVERY NOT LOOKING AS GOOD AS ABOUT A MONTH AGO *** 07:50 - FED'S DUDLEY SAYS JOBS GROWTH ENCOURAGING, BUT DON'T WANT TO OVERSTATE HOW FAR WE HAVE COME *** 07:53 - FED'S DUDLEY SAYS COMMODITY PRICE PRESSURES HAVE VIRTUALLY NOTHING TO DO WITH US MONETARY POLICY *** 07:54 - FED'S DUDLEY INFLATION EXPECTATIONS STILL SEEM TO BE WELL-ANCHORED, WAGES SUBDUED *** 07:55 - FED'S DUDLEY-QE2 HAS PROVEN TO BE A GOOD POLICY, SEE NO REASON TO PULL BACK FROM THAT YET *** 07:55 - FED'S DUDLEY-WE HAVE ABILITY TO EXIT, TOO SOON TO TALK ABOUT HOW

For a fleeting moment, we just had FNCL 4.5's at 101-20, which would be UNCHANGED on the day. This after being as low as 101-06 earlier this morning. They've backed off just slightly as Treasuries similarly backed off a move back to unchanged as well. 10yr yields are currently a mere half a bp higher on the day at 3.474, and FNCL 4.5's are 2 ticks lower at 101-18. It's too volatile an environment for some lenders to reprice for the better here, but others might. And if these gains are held, reprices would become highly likely. Naturally, if you don't have rates yet, this doesn't apply.

NEW YORK, April 1 (Reuters) - A measure of future U.S. economic growth rose slightly in the latest week, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 130.0 in the week ended March 25 from a revised 129.1 the previous week, originally reported at 129.3. That was the highest level since the week of March 11, when it stood at 130.3 The index's annualized growth rate rose to 6.5 percent from 6.4 percent a week earlier. (Reporting by Padraic Cassidy; Editing by Theodore d'Afflisio)

*** 07:09 - FED'S FISHER - BEFORE YOU TIGHTEN YOU HAVE TO STOP ACCOMMODATING *** 07:09 - FISHER - U.S. JOBS NUMBERS GOOD, RECOVERY IS SELF SUSTAINING *** 07:09 - FISHER - FIRST STEP IN PROCESS WILL BE TO END ACCOMMODATION *** 07:09 - FISHER - SEEING SPREADS NARROW, LIBERAL LENDING PROVISIONS, SIGNS OF INCREASING SPECULATION *** 07:09 - FISHER - HIS DECISION WHETHER TO SUPPORT REINVESTING BALANCE SHEET AFTER JUNE DEPENDS ON COURSE OF ECONOMY *** 07:09 - FISHER - SHOCKS FROM JAPAN DISASTERS, MIDDLE EAST TURMOIL NOT LIKELY TO HAVE BIG IMPACT ON OUTLOOK *** 07:09 - FISHER - BEGINNING TO SEE REACH FOR YIELD HAPPEN AT A MUCH MORE RAPID PACE, NEEDS TO BE CLOSELY MONITORED *** 07:11 - FISHER - WE ARE MAKING PROGRESS IN TERMS OF A SUSTAINED ECONOMIC RECOVERY, EXPECT TO CONTINUE MOVING IN THAT DIRECTION

***FED'S LACKER SAYS VERY PLEASED WITH JOBS REPORT, SEES STRONG MOMENTUM IN ECONOMY -- CNBC ***FED'S LACKER SAYS FED MUST KEEP AN EYE ON POTENTIAL INFLATION RISK ***FED'S LACKER SAYS WOULDN'T BE SURPISED TO SEE FED RAISE RATES TO CURB INFLATION BEFORE YEAR END ***FED'S LACKER SAYS FED TRYING TO THINK THROUGH SEQUENCE OF CURBING MBS PURCHASES, RAISING RATES *** FED'S LACKER SEES A LOT OF INFLATION PRESSURE FROM COMMODITY PRICES, OTHER INPUT COSTS ***FED'S LACKER SAYS DOES NOT THINK FED IS BEHIND THE CURVE ON INFLATION *** FED'S LACKER SAYS HOUSING MARKET LIKELY TO BE FLAT, NOT AS IMPORTANT TO OVERALL ECONOMY AS BEFORE *** FED'S LACKER SAYS MUST BE ALERT TO NEED FOR POSSIBLE RAPID WITHDRAWAL FROM STIMULUS MEASURES

After an exceedingly long and narrow range prevailed in bonds this morning, 10yr yields just broke lower from 3.5's down to 3.48, but a rising stock market may give pause to any further rally attempts. We need to allow a bit of time for money to come off the sidelines now that all the data is in for the morning. Then we should start to notice what is expected to be a reasonably correlative connection between stocks and bonds for the rest of the day. As for MBS, they're near their highs, currently down 5 ticks on the day at 101-14, and have been trending in a direction that could result in reprices for the better, were the trend to continue.

(Reuters) - U.S. jobs growth is likely to rise more rapidly in the coming months as the economic recovery gathers steam, but this is not a reason for the Federal Reserve to reverse course, a top Fed official said on Friday. "We are still very far away from achieving our dual mandate of maximum sustainable employment and price stability," New York Federal Reserve Bank President William Dudley said, according to prepared remarks. "Faster progress towards these objectives would be very welcome." The president of the New York Fed has a permanent voting seat on the Fed's policy-setting panel. Dudley's recent views have been "dovish" on inflation. At its last meeting, the Fed unanimously voted to keep its $600 billion bond purchase program unchanged. The program is scheduled to end in June. Dudley was in San Juan, Puerto Rico, to address the E-3 Summit of the Americas. Earlier on Friday the U.S. government released its employment data for March, which showed a second straight month of solid gains and a decline in the jobless rate to a two-year low of 8.8 percent. Graphic: r.reuters.com/kab88r Dudley called the jobs data "good news" but said the Fed would need to see sustained strong employment growth to be sure that a "virtuous circle" -- in which rising demand generates more rapid income and employment growth and leads to more consumer spending -- has become firmly established. While there is still uncertainty about the speed of the labor market recovery, Dudley said, he is "hopeful that jobs growth will increase more rapidly in the coming months." Puerto Rico is part of the New York Fed's district. (Reporting by Kristina Cooke; Editing by Leslie Adler)

*** US FEB CONSTRUCTION SPENDING -1.4 PCT (CONSENSUS -0.1) TO $760.6 BLN VS JAN -1.8 PCT (PREV -0.7 PCT) *** US FEB PRIVATE CONSTRUCTION SPENDING -1.4 PCT, PUBLIC SPENDING -1.3 PCT *** US FEB CONSTRUCTION SPENDING LOWEST SINCE $759.9 MLN IN OCT 1999

*** ISM REPORT ON U.S. MANUFACTURING SHOWS PMI AT 61.2 IN MARCH (CONSENSUS 61.0) VS 61.4 IN FEB *** PRICES PAID INDEX 85.0 IN MARCH (CONSENSUS 83.0) VS 82.0 IN FEB **** NEW ORDERS INDEX 63.3 IN MARCH VS 68.0 IN FEBRUARY

After getting as low as 101-08, FNCL 4.5s are back up to 101-13. We're still in fairly uncertain territory as can be seen in the 10yr's unwillingness to dip below pre-NFP yields at 3.491. But neither have they re-entered the post-NFP "knee jerk range" starting at 3.51. Interestingly enough, the trading range is narrowing such that it's apex will occur around the time the stock market opens. So we're anxious to see how well-connected the stock lever is today. Right now, it looks like stock movements will be the tie-breaking vote for the bond markets indecisive range-trade this morning.

(Reuters) - The U.S. Federal Reserve "should not be too sanguine" in believing that the time to reverse easy monetary policy is a long way off and that it will be gradual, a top Fed official said on Friday. "A stronger rebound in the economy or inflation than some now expect could require policy actions to be taken sooner and more aggressively than many observers seem to be anticipating," "As much as we may wish it to be so, easing monetary policy cannot eliminate the real adjustments that businesses and households must make in the face of rising oil or commodity prices," he said. He said the Fed has the tools it needs to tighten monetary policy and that it should lay out a systematic exit strategy. He reiterated that an explicit inflation target would be helpful in ensuring inflation expectations remain well-anchored. (Reporting by Kristina Cooke; Editing by Leslie Adler)

As you might expect, the initial reaction to the March Employment Situation Report was negative for the bond market. 10yr yields spiked to 3.523 but then looked like they MIGHT be able to moderate from there. Whether or not that turns out to be the case is still up in the air as they just gave up that line of defense to 3.526. However! That didn't last long and currently they're back down to 3.517 in heavy trading. FNCL 4.5's are down 11 ticks on the morning and also doing a fair job of holding ground at their low levels, currently 101-08. On the off chance you had rates before the report, they may have or may be getting worse. If you didn't have rates, expect weaker sheets and expect that weakness to be amplified to some extent by a small uncertainty premium until trading settles down.

From NAMB's website: "The US Court of Appeals has granted a stay on Fed's LO Compensation rule. The hearing will be on April 5th. The RULE IS DELAYED UNTIL THE RESULTS OF THE HEARING. This announcement about the delay of the loan originator compensation rule is not an April fool's joke".....What can we do to help NAMB/NAIHP? Let us know.

*** MARCH NONFARM PAYROLLS +216,000 (CONSENSUS +190,000) VS FEB +194,000 (PREV +192,000), JAN +68,000 (PREV +63,000) Today 05:30 - US MARCH PRIVATE SECTOR JOBS +230,000 (CONS +200,000), FEB +240,000 (PREV +222,000) *** MARCH GOVERNMENT JOBS -14,000 VS FEB -46,000 (PREV -30,000) *** MARCH JOBLESS RATE 8.8 PCT (CONSENSUS 8.9 PCT) VS FEB 8.9 PCT (PREV 8.9 PCT) *** MARCH AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS 0.0 PCT (CONS +0.2 PCT) VS FEB 0.0 PCT (PREV 0.0 PCT), TO $22.87 VS FEB $22.87; MARCH YEAR-ON-YEAR EARNINGS +1.7 PCT *** MARCH AVERAGE WORKWK ALL PRIVATE WORKERS 34.3 HRS (CONS 34.3 PCT) VS FEB 34.3 HRS (PREV 34.2), FACTORY 40.5 VS 40.6, OVERTIME 3.3 VS 3.3 *** MARCH FACTORY JOBS +17,000 (CONS. +30,000) VS FEB +32,000 (PREV +33,000) *** MARCH GOODS-PRODUCING JOBS +31,000, CONSTRUCTION -1,000, PRIVATE SERVICE-PROVIDING JOBS +199,000, RETAIL +18,000 *** MARCH AGGREGATE WEEKLY HOURS INDEX FOR ALL PRIVATE WORKERS +0.2 PCT VS FEB +0.5 PCT *** MARCH JOBLESS RATE LOWEST SINCE 8.6 PCT IN MARCH 2009