If you decided to take the day off an enjoy a pint or two you didn't make a bad choice...

We witnessed more of the same predictable MBS behavior today. MBS grew weaker as TSYs rallied which brought about profit taking. MBS then strengthened as TSYs sold (yield curve steepened) and mortgage buyers returned. The usual source of liquidity (The Federal Reserve= Usual Suspect) remained ever present to oversee stability with a little help from overseas accounts who love the warm and fuzzy feeling of a  good old explicit government guarantee (SEE CHRIS FARLEY IN TOMMY BOY IF YOU WANT TO KNOW ABOUT A GUARANTEE). Overall trading volume a wee bit below normal. By the end of the day the stack was relatively unchanged....

APRIL FN30_______________________________

FN 4.0 -------->>>> +0-02 to 99-02 from 99-00

FN 4.5 -------->>>> +0-02 to 101-03  from 101-01

FN 5.0 -------->>>> +0-02 to 102-11 from 102-09

FN 5.5 -------->>>> +0-02 to 103-00 from 102-31

FN 6.0 -------->>>> +0-02 to 103-20 from 103-18

APRIL GN30___________________________________

GN 4.0 -------->>>> +0-02 to 99-03  from 99-01

GN 4.5 -------->>>> +0-02 to 101-08  from 101-06

GN 5.0 -------->>>> +0-04 to 102-25 from 102-21

GN 5.5 -------->>>> +0-03 to 103-12 from 103-09

GN 6.0 -------->>>> +0-02 to 103-25 from 103-23

Equity markets found optimism in the housing data this morning. I broke it down plain and simple in an earlier post today if you missed it....EARLIER POST TODAY IN CASE YOU MISSED IT. The basic premise of my commentary was HOORAY for Housing Starts but don't get too excited just yet...we need to see several months of growth (from record lows) to start feeling like we can discuss macroeconomic bottom.

The MBS market remains happily range bound while market participants await the implementation of the Obama Administration's Housing Plan. (BORROWERS ASK YOUR LOAN OFFICER ABOUT DU REFI PLUS). Mr.Matt Graham gave a rousing illustration of "the range". MATTS ROUSING ILLUSTRATION OF THE RANGE

Tomorrow market participants will have mixed emotions about positioning themselves for the 2:15 release of the FOMC statement. From an MBS perspective we expect to hear continued verbiage about the Fed's willingness to participate in markets and perhaps additional efforts to free up credit and keep rates low (ie purchasing the LONG BOND). Remember mortgage rates would be a percent or two higher without the Fed's help right now...we would like to hear how they are willing and ready to keep buying. Matt and I will have more on this tomorrow when your attention is off corn beef and cabbage and your Guinness/Whiskey. 

I have one slightly off topic question though.....Do you REALLY CARE about AIG anymore?????

Other Data

7AM Mortgage Applications...market is expecting more applications. What do you think....did you take a bunch of new apps last week? Are borrowers getting frustrated with servicer's inability to originate and process new loans? I hope so...maybe they will start calling bankers and brokers for help!

830 CPI...consensus estimate is headline number to be +0.3% and for core to be +0.1%. Last month headline CPI was +0.3% and Core CPI was 0.2%.

830 Current Account Q408....consensus is -165,000,000,000 ( NEGATIVE 165 BILLION)

Be safe tonight people...you have borrowers to service tomorrow

PS  I HEARD A RUMOR THAT MORTGAGE INSURERS MAY DROP CREDIT SCORE REQUIREMENTS AND DTI REQUIREMENTS....I USUALLY DONT SHARE RUMORS UNLESS I AM SURE TO REMIND YOU THAT IT WAS A RUMOR

PPS: Secondary should have a nice bit of profit built up after the slow and steady rally in MBS markets. Perhaps you are owed a few bps on your rate sheets?