We characterized yesterday as "logical and well contained" with the benefit of some hindsight.  While today's session wasn't "well contained," it was rather logical in that it went where you'd expect it to go given the events.  Merkel surprisingly supportive of Greece remaining in the Euro-zone?  Bond markets selling = logical.  ECB wires saying certain MoPo operation with certain Greek banks is on hold?  Bond markets bouncing back = logical.  FOMC Minutes from a meeting that took place BEFORE the recent round of Euro-drama ramped up showing no incrementally hawkish viewpoints?  Bond markets inferring Fed must be that much more willing to stimulate given recent events = logical.  All in all it led MBS to all-time highs yet again, and bond markets were generally able to eke out some minor gains.  As expected the morning data was overlooked and the FOMC minutes had a reasonable impact in a session that remained muted overall thanks to the long, dark cloud of Greek uncertainty stretching to elections in late June.  

MBS Pricing Snapshot

The just-released FOMC Minutes from the April 24-25 meeting generally confirmed that QE3 or at least an extension of existing "twist" bond buying remains on the table. MBS grabbed another few ticks of all-time high and 10's are down into the 1.76's. Volume has spiked somewhat, but not as much as it did earlier on the ECB/Greece news. So far, looking like a nominal extension of an existing rally. Positive reprice risks outweigh negative (which would only come due to "pipeline control" at this point).

With some additional clarification from the ECB on the announcement that certain Greek banks would be temporarily cut off from monetary policy operations, markets seem to have found their pre-FOMC Minutes groove.

Treasuries and MBS have flattened out near their best levels of the day while equities are bouncing along their worst levels of the day. Everything is following German Bunds which bounced twice on a ceiling around 1.50 but now grind sideways around 1.47 after the ECB wires.

And that's a fair characterization of both sides of the market now: "grinding sideways" ahead of FOMC Minutes. Volume is lower than it was, but stable and, at least "present." We've seen one positive reprice so far. While more are not out of the question before FOMC Minutes, they're not as possible or as likely as they would be if MBS were stable or rallying after FOMC Minutes.

By the end of 2011, NMLS data show that there were:
-17,121 companies holding 33,124 active state licenses
-11,081 registered depository institutions and subsidiaries
-116,991 individual MLOs holding 226,010 active state licenses
-375,654 federally registered MLOs

See the full report

An earlier article had been making rounds on ECB President Mario Draghi's comments regarding a potential Greek Euro-zone exit. Effectively, Draghi said that he wants Greece to remain in the Euro-zone but that it ultimately was not the ECB's job to decide that. Another article noted Draghi as saying the ECB will not compromise on its principles to keep Greece in the EZ. In other words, there's a line in the sand.

Treasuries, stocks, and everything really, saw it's biggest volume spike of the day when a related wire hit moments ago:

RTRS- ECB STOPS MONETARY POLICY OPERATIONS TO SOME GREEK BANKS AS RECAPITALISATION NOT IN PLACE -CENBANK SOURCES

Bottom line, the ECB is wasting no time in showing Greece the line in the sand. MBS and Treasuries both hit their best levels of the day following the wire, but have since moderated a bit--now back to just 'strong' levels. We don't know where markets are going with this one yet, but wanted to let you know the cause of the recent spike. It could turn out to be more 'shock value' than anything, but we'll keep you posted.