MBSonMND: MBS MID-DAY
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FNMA 3.5
93-22 : -0-12
FNMA 4.0
97-29 : -0-10
FNMA 4.5
101-12 : -0-08
FNMA 5.0
104-11 : -0-06
GNMA 3.5
94-17 : -0-09
GNMA 4.0
99-12 : -0-09
GNMA 4.5
102-21 : -0-06
GNMA 5.0
105-26 : -0-05
FHLMC 3.5
93-15 : -0-13
FHLMC 4.0
97-25 : -0-09
FHLMC 4.5
101-09 : -0-07
FHLMC 5.0
104-08 : -0-06
Pricing as of 11:00 AM EST
UPDATE: Another Bout Of Weakness In Bonds Tests Previous Lows - Reprices At Risk
After making an effort to climb out of the dumps, MBS and treasuries find themselves right back there. FNCL 4.5's are down 8 ticks on the day at their lows of 101-12. 10yr notes moved sharply higher to test their previous high yields fo the day at 3.546, although they've bounced a few times there without going higher. Reprices are not a big risk as the moment as we've been relatively weak all morning, but if a lender priced very early, or priced on the upswing that occurred in the first part of the 10am hour, it is an outside possibility. But the most serious risks would be reserved for breaking lower than current levels.

Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
10:55AM  :  Labor Market Related Beige Book Excerpts
Boston, Richmond, and Chicago reported more permanent job placements occurring in the market, while Atlanta businesses reported a continued preference for hiring temporary workers rather than permanent workers. Several Districts described an increase in demand for staffing services, especially for high-skilled IT positions. Adverse weather conditions continued to hamper agricultural production in many Districts, but strong prices helped producers of cotton, corn, soybeans, wheat, poultry, hogs and cattle. St. Louis attributed a decline in manufacturing activity to several factory closings. Cleveland, Atlanta, and Minneapolis indicated that adverse weather conditions temporarily disrupted production. Philadelphia, Richmond, Minneapolis, and Dallas observed rising demand for general professional business services, with several reports singling out accounting firms. Dallas noted that much of this rise in demand for accounting services was related to consulting and transactional work. Several Districts also cited increased demand for healthcare, insurance, and legal services. The New York District, while reporting that legal hiring had picked up a bit, observed that it was from very low levels. St. Louis reported overall strength in business services, although contacts in government services and religious organizations announced plans to decrease operations and lay off workers. San Francisco also saw improved demand for consumer and business services, but countered that providers of healthcare, legal, and accounting services reported that demand remained largely flat.
10:25AM  :  House Vote to Kill HAMP Delayed
RTRS-U.S. HOUSE REPUBLICANS DELAY PANEL VOTE TO KILL OBAMA'S MAIN MORTGAGE AID PROGRAM
10:18AM  :  ECB's Trichet Says "Strong Vigilance" Warranted
ONE REASON RATES ARE HIGHER AFTER 830AM HEADLINES FLASHED: (Reuters) - Inflationary pressures have increased over the last month, risks are to the upside and "strong vigilance" is required, European Central Bank President Jean-Claude Trichet said on Thursday. "Strong vigilance is warranted with a view to containing upside risks to price stability," Trichet told a news conference after the bank kept interest rates at a record low of 1 percent. He said inflation pressures had increased since the ECB last met a month ago, largely due to a rise in commodity prices, adding that price risks were on the upside. The ECB used the phrase "strong vigilance" repeatedly during its 2005-2007 rate hike cycle, typically one month before it raised rates, although there were exceptions to that rule. It is not clear whether the verbal signal still holds good. Euro zone inflation accelerated to 2.4 percent last month, moving further above the ECB's target of just below 2 percent. (Writing by Paul Carrel, editing by Mike Peacock).
10:02AM  :  DATA FLASH: ISM Non-Manufacturing Index In Line With Expectations
*** ISM REPORT ON U.S. NON-MANUFACTURING SECTOR SHOWS PMI AT 59.7 IN FEBRUARY (CONSENSUS 59.5) VS 59.4 JAN *** ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX 66.9 IN FEBRUARY (CONSENSUS 64.0) VS 64.6 IN JAN *** ISM NON-MANUFACTURING PRICES PAID INDEX 73.3 IN FEBRUARY VS 72.1 IN JANUARY *** ISM NON-MANUFACTURING EMPLOYMENT INDEX 55.6 IN FEBRUARY VS 54.5 IN JANUARY
9:54AM  :  MBS Fall Further After Technical Support Breaks
MBS found some stability between 101-12 and 101-14 as Benchmark 10yr notes met firm support at 3.533. When certain prices or yields get as many bounces as 3.533 did this morning, it is significant when it breaks. Well... It broke. Yields moved quickly higher to 3.546. The other implication of breaking what had been a support level is that it now suggests itself as a resistance level. "Resistance" doesn't mean yields are less likely to break back through, but simply IF yields can break back through, it carries some significance. FNCL 4.5's are only a few ticks lower than their previous range, currently at 101-11. With minutes left until data, we could also be witnessing some sort of pre-data "lead-off" which could resolve itself back under recently broken technical levels on a weak report.
9:23AM  :  Despite Bond Market Losses, Support Is FIRM For Now
The rapidly rising 10yr yield hit what has turned out to be a brick wall at 3.533. We see numerous support bounces off this supportive ceiling in healthy volume. Thus it suggests itself as an important pivot today. It's too soon to consider this support to have held, but if it maintains its brick-like performance into and after ISM and the stock market open, it will be important to watch going forward (namely, that breaking it could foreshadow further weakness). FNCL 4.5's have also shown signs that they may be digging in near there lows, currently at 101-13.
8:44AM  :  ALERT: Bond Market Suffering Moderate Losses Following Morning Data
After the better-than-expected Jobless Claims report (368k vs 398k consensus), MBS and Treasuries are selling off a bit, bringing the 10yr note to 3.527 and FNCL 4.5's 7 ticks weaker on the day to 101-12. The next major scheduled Econ Data hits at 10am with ISM Non-Manufacturing Index.
8:39AM  :  DATA FLASH: Productivity And Costs Unrevised
U.S. Q4 NON-FARM PRODUCTIVITY UNREVISED AT +2.6 PCT (CONS +2.6 PCT), PREV +2.6 PCT *** UNIT LABOR COSTS UNREVISED AT -0.6 PCT (CONS -0.5 PCT), PREV -0.6 PCT *** NON-FARM PRODUCTIVITY REVISED TO +3.9 PCT FROM +3.6 PCT
8:38AM  :  DATA FLASH: Jobless Claims Fall To 368,000
JOBLESS CLAIMS FELL TO 368,000 FEB 26 WEEK (CONSENSUS 398,000) FROM 388,000 PRIOR WEEK (PREVIOUS 391,000) *** US JOBLESS CLAIMS 4-WK AVG FELL TO 388,500 FEB 26 WEEK FROM 401,250 PRIOR WEEK (PREV 402,000) *** CONTINUED CLAIMS FELL TO 3.774 MLN (CON. 3.800 MLN) FEB 19 WEEK FROM 3.833 MLN PRIOR WEEK (PREV 3.790 MLN) *** INSURED UNEMPLOYMENT RATE FELL TO 3.0 PCT FEB 19 WEEK FROM 3.1 PCT PRIOR WEEK (PREV 3.0 PCT) *** JOBLESS CLAIMS LOWEST SINCE MAY 31, 2008 WEEK; US CONTINUED CLAIMS LOWEST SINCE OCT 18, 2008 WEEK *** US 4-WEEK AVERAGE UNDER 400,000 FOR FIRST TIME SINCE JULY 2008

Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Chris Kopec  :  "I think it's wise to have a bunker mentality with respect to locking. Things could go either way in a huge hurry."
Brett Boyke  :  "read this this morning on ZH - The non-seasonally adjusted number came at 351K, a number which if contained means that the so called slack in the economy is evaporating, and that the inflationary picture is far worse than the Chairman expects. These numbers further conform to rumors for a blowout NFP tomorrow, spread yesterday, which says that based on Birth-Death adjustments, the NFP could be well over 300,000."
Victor Burek  :  "flag was only .2 worse then repriced sheets but .4 worse then first sheet"
Chris Kopec  :  "Higher oil, higher food, higher rates....all more fuel for a stock market correction"
Chris Kopec  :  "I know my wife was shocked the other day when she went to the grocery store."
Adam Quinones  :  "coughMARGINSQUEEZEcough"
Mike Drews  :  "GMAC is .4 worse than their 3:30 afternoon reprice"
Chris Kopec  :  "UN Report: Global food costs increased 8 consecutive month, and likely to continue rising, per Bloomberg TV right now."
Chris Kopec  :  "OSO...I hope you're right. But ADP / Jobless claims have people thinking about a big number, apparently....... "“The market is not taking this data well,” said Ira Jersey, an interest-rate strategist at Credit Suisse Group AG, one of 20 primary dealers that trade directly with the Federal Reserve. “The market seems to be fearing a larger-than-consensus nonfarm payrolls number tomorrow and the jobs data will set the tone for the market barring new headlines from the Mideast.” ...." http://no"
Victor Burek  :  "flagstar is about .4 worse than yesterday morning"
Oliver S. Orlicki  :  "who's floating into tomorrow? These numbers seem a lot like the last couple of months when the NFP was off considerably from expectations"
Adam Quinones  :  "put a finger in Trichet's eye too"
Victor Burek  :  "specifically the long end of the curve as he sees no long term inflation"
Victor Burek  :  "and blackrock CEO fink responded to gross' comment about who will buy treasuries by saying he is"
Adam Quinones  :  "definitely no directional bias right now. very neutral market"
JTB  :  "This feels healthy"
Adam Quinones  :  "we were expecting rates to push back this week though. So for now, with the unemployment rate expected to move higher, the bias is slightly in our favor but we're def. up against a herd of short sellers still."
Adam Quinones  :  "the reversal opens up the door for a directional move back toward 3.70%"
Adam Quinones  :  "today matters in the sense that technicals are now totally neutral after leaning slightly bullish over the past few days. "