Production MBS coupons are trading near session highs and lenders are repricing for the better.

The September FNCL 4.0 is 12 ticks in the green at 101-13 and the September FNCL 4.5 is +0-08 at  103-19. The secondary market current coupon is 5.3bps lower at 3.764%.  Current coupon yield spreads are off their widest levels of the day. Here are my marks: +78.5bps/10yr TSY note and +76.5bp above the 10yr interest rate swap.

LOAN PRICING IS NOW BASED OFF OF THE SEPTEMBER COUPON!

The 3.50% coupon bearing 10yr Treasury note is +0-19 at 104-12 yielding 2.981% (-6.9bps DoD).  FTQ volume rose into the rally which helped 10s break through 3.00% resistance with little fanfare. Since then buyers have backed away from the GO button and profit taking flows have been noted. 2.98% is a long term resistance level first observed HERE.  A push through 2.98 would likely lead to choppy trading between 2.92% and 2.98%.

S&P futures hit a low of 1076.25 after morning econ data reminded the markets that the Fed sees a 5 to 6 year recovery ahead. S&Ps have since bounced from the sessions lows on the wings of short covering. The move back toward 1086 as been in low volume and declining open interest.  If S&Ps bounce off of 1086 we could see stocks retest 1076.25 before investors unplug this afternoon. 

Who do you see buying the primary market?