FN30________________________________

FN 4.0 -------->>>> +0-03   to  99-31   from 99-28

FN 4.5 -------->>>> +0-01   to 101-24  from 101-23

FN 5.0 -------->>>> +0-01   to 102-29  from 102-28

FN 5.5 -------->>>> +0-00  to 103-20   from 103-20

FN 6.0 -------->>>> +0-01   to 104-16  from 104-15

GN30________________________________ 

GN 4.0 -------->>>> +0-04  to 100-06   from 100-02

GN 4.5 -------->>>> +0-00   to 102-00  from 102-00

GN 5.0 -------->>>> +0-00  to 103-14   from 103-14

GN 5.5 -------->>>> +0-00   to 103-28  from 103-28

GN 6.0 -------->>>> +0-01   to 104-09  from 104-08

Trading in the TSY market is brisk and busy while pessimism in the stock market is, once again, masking  fixed income investor's "supply" steepening angst. MBS prices are benefitting improved benchmark biases (TSYs looking more bullish...for now) and a lack of new originator commitments to deliver production supply of MBS (the loans you lock and close). The trend is upward but losing some steam and looking sideways into the early afternoon....overhead resistance is 100-02 for now....99-23/24 remains price support level.

This morning the Treasury reported that, next week, they will auction  $101bn Treasury notes and $57bn Treasury bills.

Treasury yields didnt have much visible reaction to the new issuance announcement. There are a few reason for this...the first being a generally gloomy outlook on stocks is disguising the quickly forgotten bearish biases of TSY traders(yes TSY traders looking more optimistic about weakness in stocks). The expected fundamentally negative response to the ongoing supply gorging of the US TSY was also augmented by the Federal Reserves morning QUANTITATIVE EASING efforts. Pre-TSY press release, the Fed purchased $7bn in TSYs notes maturing between May 2012 and August 2013....$7bn demand side funds helps improve liquidity!

My point is...sentiment is short term...no one has a long term conviction because UNCERTAINTY lies ahead....which makes it awfully hard to buy and hold anything. All markets are trading the trends...covering options....and taking profits before somone else gets their hands on 'em.

For the remainder of the day the "stock lever" will continue to provide MBS its directional guidance. As stock indices move higher and the yield curve steepens MBS will reign in dollar gains and push prices sideways. Originator supply remains a direct threat to rate sheets though....dont overlook afternoon selling and the possibility of "reprice for the worse" alerts. At this point everything is going sideways!

In your world...do you think the May DU Update will allow more lenders to aggressively seek out DU REFI PLUS loans? I havent heard much positive feedback about the program yet...which I believe is mostly a function of the reps and warrants risks associated with the applicaion of "manual overlays" and the creditworthiness of "DU REFI PLUS" borrowers. That doesnt even dive into the fact that home prices are still falling and any equity that is left is evaporating.

Perhaps one should consider this when deciding whether or not to lock now or float into the summer?