Yesterday mortgages continued their recent run of resiliency but fell victim to PROFIT TAKING late in the afternoon. Not to worry...this is all part of the plan, MBS buyers will view any periods of lower dollar prices as an opportunity to do some  "buying on weakness" ...once buyers reenter the market they will patiently wait until the bid is pushed a few ticks higher and consolidate profits so they can start the game all over again. Churning for Profits! This is made possible by a lack of supply and Fed funded liquidity (lack of volatility).

In overnight trading stock markets in Asia and Europe moved to the upside which consequently took the wind out of the sales (PUN intended) of any "flight to safety" yield curve flattening.  Unfortunately (at least for MBS prices, not spreads vs. the  UST5YR) mortgages continue to follow the directional leadership of their benchmark big brother TSYs.

When TSYs rally...MBS rally too (but usually not to the same extent) and yield spreads widen. When TSYs sell, MBS sell too (but not to the same extent) and yield spreads tighten.

Regardless of the direction TSYs have taken MBS have found a way to improve. Remember there are two ways that MBS can strengthen...tighter yield spreads or higher dollar prices. TIGHTER YIELD SPREADS=LESS RISK PREMIUM=STRONGER MBS!!! Higher dollar prices = lower mortgage rates.

Its sunny and warm outside this morning...just trying to help  you find some morning optimism! I know your cheerfulness manifests itself through YSP improvements though...

FN30_______________________________

FN 4.0 -------->>>> -0-02  to 99-31  from 100-01

FN 4.5 -------->>>> -0-02  to 101-25  from 101-27

FN 5.0 -------->>>> -0-02  to 103-02  from 103-04

FN 5.5 -------->>>> -0-01  to 103-25 from 103-26

FN 6.0 -------->>>> +0-01  to 104-20 from 104-19

GN30________________________________

GN 4.0 -------->>>> -0-02  to 100-01  from 100-03

GN 4.5 -------->>>> -0-01  to 101-31 from 102-00

GN 5.0 -------->>>> -0-01  to 103-17  from 103-18

GN 5.5 -------->>>> +0-02  to 104-04 from 104-02

GN 6.0 -------->>>> +0-03  to 104-19 from 104-16

The 2 yr note yield is up 0.025 to 0.9595

The 3 yr note yield is up 0.076 to 1.3803

The 5 yr note yield is up 0.057 to 1.8940

The 10 yr note yield is up 0.05 to 2.9133

The 30 yr bond yield is up 0.05 to 3.7729

Swap spreads are slightly wider from yesterday

 EFFECTIVE FED FUNDS: +0.00 to 0.14 from 0.14

LIBOR FIXINGS

O/N LIBOR:  +0.0012 to 0.2612 from 0.2600

1 MONTH:  -0.0088 to 0.4512 from 0.4600

3 MONTH:  -0.0075 to 1.1313 from 1.1387

6 MONTH:   -0.0109 to 1.6762 from 1.6872

1 YEAR:   -0.0113 to 1.9512 from 1.9625

SIFMA recommends 2pm bond market close today. Markets are closed tomorrow in observance of Good Friday.