C30 loan pricing is 25.9bps worse on average today and buydowns are 1.3bps more expensive. The largest rebate reductions are seen in the note rates used to fill 4.0 MBS trades. Week over week loan pricing is 6.4bps worse and buydowns are 0.8bps richer.

Far too early for a conclusive decision, but after touching the lower end of their 2 day trend channel at 3.34, 10's moved back to the other end of the channel. Rather than move higher to test earlier morning highs, they hooked back up with the trend channel support line, and bounced just over 3.336. So far, this bounce is intact, and if it can be confirmed by a move back down into the 3.33's, it's a promising technical development. MBS would also be better equipped to rally if that sort of directional stability emerges in benchmarks. Overall caveat: still far too early to tell, but something to watch and hope for...

Out of the gate the S&P is down from just under 1295 to 1291.4. Benchmark 10yr notes have recaptured nearly all their losses from the previous high, currently at 3.3507. FNCL 4.5's are up sharply to 102-10. Lenders that prices with MBS near the lows will now potentially be faced with the prospect of needing to reprice for the better if recent gains can hold above these levels.

To be fair, there were arguably two separate instances yesterday where volume in 10yr futures rose during support bounces, the first at 120-16 and the following at 120-08.We did see our first reasonable attempt at a support bounce a few minutes ago right at the 120-16 level (3.374 in 10yr cash, noted yesterday as the AM pivot). And although prices had fallen since then, they've since returned. 3.385 is the high yield mark so far today in 10yr notes. We're currently at 3.374.

The Commerce Department said " increases in the numbers of housing units authorized by building permits in the Northeast and West in December 2010 may be related to changes to state building codes for new residential construction effective in January 2011 in California, Pennsylvania, and New York."

After a heated midterm election, the Republican-led House will try to fulfill a campaign promise later today and cast votes to repeal the nation's sweeping health care law. Passage is expected, given the GOP's comfortable majority in the House. But Senate Majority Leader Harry Reid has vowed to block the measure and President Obama has threatened to veto a repeal bill.

We have a great example on our hands of how to use trend channels. They are not a PREDICTIVE tool (i.e. they, in no way, indicate that the trend will continue) but rather, are watched so that we have an indication of a shift in a previous trend. The short term channel in benchmark 10yr notes just broke with yields moving higher. FNCL 4.5's are down some more as well, at 102-03. On the off chance you have rates already today, reprices for the worse may already be possible as we're down 8 ticks from the morning's highs. Otherwise, the AM weakness should be baked in to sheets when they come out.

(Reuters) - The mortgage servicing industry should fund a new commission to compensate homeowners who have been kicked out of their homes because of errors made by servicers, a top U.S. banking regulator said on Wednesday. Federal Deposit Insurance Corp Chairman Sheila Bair said this claims commission could be modeled on those created to compensate victims of the BP oil spill and Sept. 11, 2001 terrorist attacks. In a speech outlining proposals for broad reforms to the mortgage servicing industry, Bair said she expects the industry to oppose such a commission but argued that this reluctance would be shortsighted. "Every time servicers have delayed needed changes to minimize their short-term costs, they have seen a deepening of the crisis that has cost them - and the rest of us - even more," Bair said at an event hosted by the Mortgage Bankers Association.

10yr yields moved several bps lower this morning, but met resistance in line with the trend channel we discussed yesterday, and have since risen a bout 1 bp to 3.35+. You can get a clear picture of the trend channel and it's continuance this morning by pulling up the 2 day chart in 10's. FNCL 4.5's are in a channel of their own, but a more sideways one, and are currently unchanged at 102-08. Housing Starts data has had little effect on bonds thus far.

BUILDING PERMITS: Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent (±2.1%) above the revised November rate of 544,000, but is 6.8 percent (±2.8%) below the December 2009 estimate of 681,000. HOUSING STARTS: Privately-owned housing starts in December were at a seasonally adjusted annual rate of 529,000. This is 4.3 percent (±14.1%)* below the revised November estimate of 553,000 and is 8.2 percent (±14.4%)* below the December 2009 rate of 576,000. HOUSING COMPLETIONS: Privately-owned housing completions in December were at a seasonally adjusted annual rate of 585,000. This is 4.1 percent (±17.7%)* above the revised November estimate of 562,000, but is 22.2 percent (±11.3%) below the December 2009 rate of 752,000.

(Reuters) - President Barack Obama and his Chinese counterpart Hu Jintao will confront stubborn rifts over North Korea and bilateral economic imbalances on Wednesday when they meet amid the pomp of a formal state visit. Hu's visit is not expected to yield major breakthroughs on key disputes but the United States and China planned to announce a deal to boost cooperation on nuclear security, a U.S. official said on Wednesday. Both presidents have vowed stronger cooperation between the world's two largest economies in an effort to bridge the strains of the past year over human rights, Taiwan, Tibet and the gaping U.S. trade deficit with China. Taking major strides toward narrowing these disagreements, however, will test the depth of their partnership.

(Reuters) - Wells Fargo & Co (WFC.N), the fourth-largest U.S. bank, reported a 21 percent increase in fourth-quarter profit, helped by double-digit revenue growth in multiple business units and lower credit costs. The San Francisco-based bank said earnings rose to $3.4 billion, or 61 cents a share, from $2.8 billion, or 8 cents a share, a year earlier. Analysts on average expected a profit of 61 cents a share, according to Thomson Reuters I/B/E/S. Revenue increased 12 percent to $21.5 billion. Wells report $158 billion in mortgage applications taken in the 4th quarter.

NEW YORK, Jan 19 (Reuters) - Applications for U.S. home mortgages increased last week as interest rates dipped to their lowest in a month, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 5 percent in the week ended Jan. 14. The MBA's seasonally adjusted index of refinancing applications gained 7.7 percent last week, and the gauge of loan requests for home purchases fell 1.9 percent. Fixed 30-year mortgage rates averaged 4.77 percent in the week, down 1 basis point from 4.78 percent the prior week. The rate is down from 4.93 percent at the end of December.

(Reuters) - Goldman Sachs Group Inc on Wednesday posted a decline in quarterly profit, in part reflecting lower results in fixed-income trading. Fourth-quarter net income after payment of preferred stock dividends totaled $2.23 billion, or $3.79 per share, compared with $4.79 billion, or $8.20 a share, a year earlier. Analysts on average $3.76 per share, Thomson Reuters I/B/E/S said.