From what I am seeing, you should have your best rate sheets of the year this morning.
Besides the fact that lenders are desperate for loan production, "rate sheet influential" MBS prices and benchmark Treasury yields have broken out of a month long range and are now trading at their most aggressive levels since mid-December.
The FN 4.0 is currently +0-15 at 97-25 yielding 4.212% and the FN 4.5 is +0-13 at 100-25 yielding 4.425%. The secondary market current coupon is 4.404%. FN 4.5s havent seen 100-25 since December 21, 2009.
The 3.375 coupon bearing 10 year Treasury note is +0-16 at 97-16 yielding 3.68%. While the month long range has been broken, 3.68% resistance must be successfully tested if we are too see further progress.
Testing testing...
Soft econ data helped us out this morning. The fact that stock markets have been unable to gain ground/bounce since then has been supportive of this "outside day" in the rates market. The S&P has however found support at 1135.
Ahead of the long weekend, I am treating today's gains in a defensive manner. We will get a true indication of the bond market's bias if stocks do bounce and attempt to rally. If this occurs I would expect to see profit taking in Treasuries. If the bond market is really feeling froggy about a "relief rally", look for 3.71% support to hold in 10s. While we could see a test of 3.75%, as long as"bargain buyers" add supportive trading positions by 3.75% , our outlook for a "relief rally" will remain in tact.
By the way...
Fannie Mae and Freddie Mac MBS cash flows are NOT EXPLICITLY GUARANTEED by the federal government. READ MORE