Happy Hump Day...

Recap of Yesterday..

  • Pending Home Sales +3.7% vs. +6% in Sept. Year over year +31.8%. READ MORE
  • New Residential Construction Spending +4.4%. Commercial Building -3.7%. READ MORE
  • ISM said its index of national factory activity decelerated to 53.6 in November from 55.7 in October. Employment index for the manufacturing  industry slipped to 50.8 in November from 53.1 in October, which had been the strongest showing since April 2006.
  • Lend America ceases lending operations READ MORE
  • The dollar depreciated and US stocks were higher.  Dow +1.23% to 10,471.58, S&P +1.21% to 1,108.87, NASDAQ +1.46%  to 2,175.81.

The yield curve STEEPENED as the rates market unwound Dubai debt distress flight to safety positions in the long end of the curve. The UST10YR went out the door yielding 3.28%. 2s10s ended the session 8bps steeper at 261bps

It was a busy session for mortgages. Rate sheet influential MBS prices  weakened as a steeper yield curve brought out profit takers. The Fed was buying as originators sold over $3bn in loan supply, official buyers (the Fed) also adding 5.5s.

The FN 4.0 was -0-20 at 99-26 yielding 4.026% and the FN 4.5 was -0-14 at 102-06 yielding 4.244%. The secondary market current coupon was 4.028% and yield spreads were WIDER as TSYs outperformed MBS

Rate sheet rebate was reduced as lenders repriced for the worse

So Far Today...

  • SHANGHAI +1.06%, HANG SENG +0.80%, TOPIX +0.11%, NIKKEI +0.38%, CAC -0.11%, DAX -0.24%, FTSE -0.18
  • Mortgage Applications +2.1% after 4.5% decline last week. Seasonal adjustment factors (Thanksgiving) boost applications index. On unadjusted basis, mortgage apps were down 29.3% week over week.
  • The ADP reported that private payrolls fell 169,000 to 108,156,000 in November...worse than the 155,000 economists were expecting.

Stock futures fell a few points after the data, nothing major though...

The S&P continues to test new 2009 highs....

10yr TSY yields are holding near the all important 3.27/28 pivot point...

We continue to remind of the importance of THE RANGE. The recent rise in rates adds further evidence that the market is more comfortable trading THE RANGE than trending towards untested levels. (3.27-3.50 with occasional trips to 3.20 and 3.57)

The FN 4.0 is -0-03 at 99-23 yielding 4.035% and the FN 4.5 is -0-03 at 102-04 yielding 4.24%. The secondary market current coupon yield is 4.04%. The CC yield is  +75bps over the 10yr TSY yield and +64bps over the 10 yr swap rate. Rate sheet influential yield spreads are WIDER this morning.

RATE SHEETS WILL BE WORSE THIS MORNING