There are plenty of shiny objects for market participants to be distracted by today....Swine Flu and CDC press releases, F-16's spotted flying across the Manhattan sky line, GM's revamped Viability Plan's, $101bn of new TSY debt, bank stress tests and SCAP....all these distractions are contributing to a confused marketplace!!!!

Stocks opened higher....but have since turned negative. The Dow is currently near its lows of the day...

The yield on the 10 yr Treasury note has done the exact opposite....yields moved up in the AM (prices lower), but have since begun to improve and are at intraday low yields (high prices). A flatter yield curve allows MBS buyers to move into longer duration MBS coupons....unfortunately not enough to excite us about a broad MBS market buy and hold "down in coupon" spending spree :-(

Nonetheless, a SLOW/SLUGGISHLY traded MBS market has reached its intraday highs!!!  Which means ORIGINATORS WILL BE LOOKING TO LOCK THEIR LOANS...for the same reason loan officers lock their loans when YSP is running near week over week highs. That implies "rate sheet influential" MBS coupon prices may move lower by day's end (which may or may not be followed by quick recovery. Will be based on Fed's block buying)

FN30________________________________

FN 4.0 -------->>>> +0-13  to  100-15  from 100-02

FN 4.5 -------->>>> +0-09  to 102-04  from 101-27

FN 5.0 -------->>>> +0-06  to 103-06  from 103-00

FN 5.5 -------->>>> +0-03  to 103-27  from 103-24

FN 6.0 -------->>>> +0-03  to 104-20  from 104-17

GN30________________________________ 

GN 4.0 -------->>>> +0-10  to 100-18  from 100-08

GN 4.5 -------->>>> +0-09  to 102-12  from 102-03

GN 5.0 -------->>>> +0-06  to 103-25 from 103-19

GN 5.5 -------->>>> +0-02  to 104-02  from 104-00

GN 6.0 -------->>>> +0-02  to 104-13  from 104-11

Yes...if lenders are basing their rate sheets off of current market MBS prices, they should be repricing for the better. But we know most mortgage bankers did a hefty amount of forward committing a few weeks ago when MBS prices were near current levels (intra month highs). Therefore the decision regarding whether or not to pass along intraday MBS gains may be based on other factors such as competitiveness of other lenders and its implications on fall out risk. Once one of the "big boys" publishes new rate sheets...look for others to follow!!!