Mortgage rates ticked considerably lower yesterday after the Federal Reserve announced all out war on long term interest rates on Wednesday.  The mortgage specific headline news was obviously heard on the street as droves of cash strapped borrowers looked to lock in a record low mortgage rate and some added disposable income. The word from lock desks was brief at best as frustrated and frantic pipeline managers struggled to balance their buckets and forecast fall out risk. Mortgage banks didn't wait long to protect their positions after borrowers eagerly exited their fatigued fence sitting positions...evident by the superfluous  supply that hit the MBS market late in the afternoon yesterday. The surge of supply coupled with the early afternoon TSY selling (MBS spread tightening) that drew out MBS profit takers unfortunately forced lenders to reign in aggressive mortgage rates near the day's end. After all was said and done MBS supply was recorded near the $8bn mark...compare that to the recent range of $2/3 billion per day from originators and profit takers...how's that for some perspective?

This morning lock desks will be sorting out the mess and adjusting their process flows to add efficiency and accountability. Mortgage rates are a few bps higher as YSP has been drawn in on investor rate sheets. The MBS market remains long on "It that shall not be named"...the timing of which has been forecast to take place in late spring once the Obama Administration's housing plan takes effect. We get no econ data today but do get the pleasure (again) of hearing from Benny Bernanke at noon.

The stack has been range bound so far this morning while the yield curve is relatively unchanged. Overnight TSY yields did push lower as European equity investors re-weighed the real risks of US debt monetization induced inflation. MBS market participants should welcome the lack of activity as they patiently consider the hazards of testing the limits of "up in coupon" profitability. Garth...I am still not ready to concede that inflation is an appropriate concern :-D....jobs, industrial production/manufacturing are first and foremost on macroeconomic "honey do" list...not to mention that toxic asset issue.

MBS spreads are leaking out a few ticks so far this morning...remember my sobering soapbox rant last night??? Well...."up in coupon" outperforms today...boohiss. Don't panic yet though...we have yet to see if lender's will continue to "hoard your ysp"  or allow primary/secondary spreads to tighten...the early indications of "up in coupon" were to be expected given the governments 3 failed attempts at pushing mortgage rates into the 4.00% range. (I think Matt may show you more on this later)

APRIL FN30_____________________________

FN 4.0 -------->>>> -0-03 to 100-13 from 100-16

FN 4.5 -------->>>> -0-02 to 102-03  from 102-05

FN 5.0 -------->>>> -0-01 to 103-00 from 103-01

FN 5.5 -------->>>> +0-00 to 103-17 from 103-17

FN 6.0 -------->>>> -0-01 to 103-31 from 104-00

APRIL GN30______________________________

GN 4.0 -------->>>> -0-05 to 100-17  from 100-22

GN 4.5 -------->>>> -0-05 to 102-08 from 102-13

GN 5.0 -------->>>> -0-02 to 103-14 from 103-16

GN 5.5 -------->>>> -0-01 to 103-28 from 103-29

GN 6.0 -------->>>> +0-00 to 104-04 from 104-04