Good Moooooooorning MBS!!!! (Robin William's Voice). DOWN IN COUPON RESUMES. Your rate sheets should (SHOULD) be better this morning...

Fn 4.0-> +0-11 to 101-12              Gn 4.0-> unchanged at 100-29

Fn 4.5-> +0-06+  to 102-22           Gn 4.5-> +0-08 to 103-17

Fn 5.0-> +0-06  to 103-1+             Gn 5.0-> +0-06+ to 104-02

Fn 5.5-> +0-03+ to 103-22+           Gn 5.5-> +0-04 to 104-10

Fn 6.0-> +0-02+ to 103-28             Gn 6.0-> +0-01 to 104-05

The Fed let profit takers capture some gains before re-entering the MBS market yesterday. As previously explained the only "non-tapebomb" events expected to slow the fervent down in coupon pace are  periods of originator hedging (selling forward commitments) and profit taking. We have seen originators dump supply and we have observed profit taking...and guess what....it wasn't all that detrimental to our momentum. Yes we are quite aware that some investors repriced for the worse yesterday, unfortunately rate sheets are indeed disconnected from MBS trading, so without having an operational update from each lender every morning our ability to foresee the future has been hindered. We will however continue to monitor rate sheets for patterns and trends like many of you do every morning...if anything of note arises we will alert but we must note that we are encouraged by the passing of January settlement. Once the slate is wiped clean and funding sources become available, we anticipate lower "street level" rates and happy originators and borrowers across the country.

The Weekly Jobless Claims press release had this to say...

"In the week ending Jan. 3, the advance figure for seasonally adjusted initial claims was 467,000, a decrease of 24,000 from the previous week's revised figure of 491,000. The 4-week moving average was 525,750, a decrease of 27,000 from the previous week's revised average of 552,750."

Well...that's cool. Jobless Claims surprisingly fell for the second week straight. Economists were expecting around 540,000 claims so this is relatively decent news. Usually bad jobs data (or any bad econ data) is a fixed income portfolio positive. However in this case less job losses implies more people can POSSIBLEY/MAYBE  pay/qualify  for a mortgage....actually not really it was only a two week slow down in job losses. BUT HEY put on your pom-poms and cheer for the mortgage world to provide some job creation!!!

Here is the link to the press release if you are interested in reading.

FYI based on our models we are forecasting an unemployment rate upwards of 7.0%....btw in the interest of full disclosure our model was generated by Matt's artificially intelligent Pontiac Trans Am---its name is K.I.T.T.  You see K.I.T.T is actually the brain behind for the analysis we provided you...don't tell anyone please. (PS Matt loves Hasselhoff)

Remember all that money the government is spending??? Well that  needs to be paid for by someone so the Treasury Department will auction $16 billion in 10yr notes at 1 pm today.

The FHLMC rate survey is due out and Consumer Credit is released at 3pm.

OH and I almost forgot. We get the first update of Fed MBS spending at 4pm today in the Federal Reserve's H.4.1 "Factor's Affecting Reserve Balances" statistical release.