Good Morning All. Happy 2010.

If you are not a follower of MND NewsWire or seldom visit our homepage, I posted some thoughts on recent calls for leadership in 2010. READ MORE

Stocks, bonds, and commodities are all in the green...the dollar is down 0.66%. It has been a slow start in the secondary mortgage market as MBS supply is barely over the $500 million mark. The Federal Reserve has been a buyer today.

Thin trading conditions and modest MBS supply have been supportive of both price appreciations and relative value outperformance against benchmarks today. The FN 4.0 is +0-10 at 96-30 yielding 4.291% and the FN 4.5 is +0-06 at 100-01 yielding 4.506%. The secondary market current coupon is 4.504%. MBS yields have fallen more than the 10yr TSY and 10yr swap.

The market clearly reacted to 10am data releases.

The reaction to morning data is again obvious in the Treasury market. The 3.375% coupon bearing semi-annual paying 10 year TSY note is +0-05 at 96-13 yielding 3.815%. 3.78% is near term resistance while 3.91% is support in the event rates resume selling sentiment. 3.85 is a pivot point (where the market reconsiders directionality)

We have heard of Central Banker (real money) buying in the long end of the Treasury yield curve this morning.  This could be considered "bargain buying" and is a sign of support for the rates market. Unfortunately we witnessed this on a consistent basis in late 2009 when trading conditions were extremely illiquid. Although trading has been more active than pre-Christmas flows...volume is still light. That said...I am not peering too deeply into the BIG PICTURE implications of today's session.

The Week Ahead offers several opportunities for a corrective rally, however it is unlikely that the market ventures too far from the recent range ahead of Friday's release of Non-Farm Payroll data (The Employment Situation Report)..that is unless the ADP Report on Wednesday surprises the market on the bearish side.

Lots more to discuss re: mortgage market headlines, but since I am a bit behind today, I will address later in the day once I catch up. Check out AROUND THE WEB for more in the mean time.