As we noted earlier, trends in both MBS and Treasuries had been consolidating and were set to see a breakout with either positive or negative implications. Bonds broke the bullish resistance trend and FNCL 4.5's have moved up to 102-12. As the earlier weakness coincided with a time of morning where lenders usually release their first rate sheets, some of those rate sheets were fairly conservative. As such, we've now seen our first reprices for the better and more may follow among any lenders who also priced around 930am Eastern, assuming MBS hold near current levels.

Provident Funding sent its clients "TILA Compensation Rule FAQ's". Brokers should go to www.pfloans.provident.com. "Click on the Things You Need to Know link. Click on the FAQ's tab on the left-side menu. Select the TILA Compensation Rule category." (Remember that the Provident Funding FAQ's should not be considered legal advice - consult your attorney.) Provident also supplied its clients with the Broker Fee Agreement (with the borrower) sample form has been updated, although brokers are able to still use their own Broker Fee Agreement forms - make sure that the terms must be consistent.

After weakening moderately, bonds regained some ground only to weaken again. Each time MBS and Treasuries bounced, it was to higher lows or lower highs, hence consolidating. We also refer to this phenomenon as "converging trends" (because the trendlines that rest along the highs and lows are sloped toward each other, the charting of these lines is also referred to as "a triangle." The bottom line to all this is that whatever security we're charting will inevitably have to break one side or the other of the triangle. The risk is that if it breaks the bearish line, it could be read as a signal of additional losses. Things don't always happen this way, and the significance depends on volume, but the emergence of the pattern this morning ranks as a minor concern (largely because there's not much else going on this morning). If 10yr yields can break into 3.27's, the technical concerns mostly evaporate.

AN UPDATE ON OUR CALL FOR TIGHTER PROFIT MARGINS ON MAIN STREET AND WALL STREET IN 2011....(Reuters) - Nike plans to raise the prices on its shoes and sports clothing markedly in 2012 to cope with the rising costs of oil, cotton and transportation that are hurting its profitability. The shares in the the world's largest athletic shoe and clothing maker plunged 7 percent on fears that already stretched margins will come under even greater pressure this year and next. It reported a lower-than-expected quarterly profit on Thursday, hurt by rising production costs. The company expects margin pressures to persist this year, intensifying in the current quarter. "This is evidence that rising input costs are hurting Nike's profit," said Giri Cherukuri, a portfolio manager with OakBrook Investments, which owns Nike shares. "Nike's margins will be under pressure for the rest of the year." To contend with that, Nike executives said the company would ramp up and broaden its price increases. Gross margins, which slipped 1.1 percentage points to 45.8 percent during the third quarter, were further hurt by the greater use of air freight to ship products and meet consumer demand. The company said there had been some product shortages and that suppliers would increase their capacity. Nike forecast its gross margin during the current quarter will be 3 percentage points below year-earlier levels, but that pressure on margins would ease later in the year as price increases kick in.

This morning we're seeing the extent to which one little layer of the FTS bid had been benefiting the bond market. After the Libyan foreign minister said that Libya is halting all Military Action, 10yr yields moved from around 3.26 to 3.30. It's really that simple. FNCL 4.5's dropped from 102-14 to 102-10 in response. This should make for slightly weaker rate sheets this morning.

(FINANCIAL TIMES) -The Group of Seven industrialized nations have agreed to co-ordinated currency intervention for the first time in a decade to help Japan recover from its devastating earthquake, tsunami and nuclear crisis. Authorities in Japan, the eurozone, the UK, Canada and the US agreed on Friday to help weaken the yen in a rolling intervention that began at 9am in Tokyo, which immediately pushed the yen down from above Y79 against the US dollar to below Y81. It is the first time the G7 has agreed to intervene as a group since it propped up the euro in 2000 and shows the extent of international sympathy for Japan. Japan’s currency, trading near Y83 the day before the earthquake and tsunami hit on March 11, had climbed to Y76.25 by Thursday as traders anticipated huge demand from Japanese investors and financial institutions as they sell foreign assets and bring funds home for reconstruction. A strong yen would add to the pain of rebuilding by hampering Japanese exports. The currency retreated from a record high against the dollar late on Thursday as speculation mounted that the ministry of finance would intervene. News of the G7 agreement lifted the Nikkei 225 stock average by 2.72 per cent to 9,206.75 on Friday, paring some of its 12.6 per cent fall over the previous four days, while equity markets across Asia were broadly higher.

(Reuters) - The United Nations authorized Western-led attacks on Muammar Gaddafi's forces, as he vowed to crush Libya's revolt with "no mercy, no pity" and rebels pleaded for military aid before time runs out. French sources said action could follow in hours, and could include France, Britain, possibly the United States and one or more Arab countries. A U.S. official said no immediate U.S. action was expected. Gulf state Qatar said it would take part but it was unclear whether that meant military help, while Denmark said it planned to contribute warplanes. People in Misrata said the rebel-held western Libyan city was being pounded by Gaddafi's forces on Friday morning. "They are bombing everything, the houses, the center of the city," rebel Saadoun told Reuters by phone. "We believe they want to enter the city at any cost before the international community starts implementing the U.N. resolution. "We call on the international community to do something before it's too late. They must act now." Another fighter named Mohammed said tanks were advancing toward the center. "All the people of Misrata are desperately trying to defend the city," he said. Four people had been killed and 70 wounded, Al Arabiya television said. A government spokesman said the military operation should be completed on Friday. Time was also running short for Benghazi, the eastern city that has been at the heart of Libya's month-old revolt. But Gaddafi's troops did not fulfill his threat to overrun the rebel base overnight after their rapid counter-offensive brought them to within 100 km (60 miles) of the eastern city. "We will come. House by house, room by room," Gaddafi said in a radio address to Benghazi late on Thursday.

(Reuters) - Japanese engineers conceded on Friday that burying a crippled nuclear plant in sand and concrete may be a last resort to prevent a catastrophic radiation release, the method used to seal huge leakages from Chernobyl in 1986. But they still hoped to solve the crisis by fixing a power cable to two reactors by Saturday to restart water pumps needed to cool overheating nuclear fuel rods. Workers also sprayed water on the No.3 reactor, the most critical of the plant's six. It was the first time the facility operator had acknowledged burying the sprawling complex was possible, a sign that piecemeal actions such as dumping water from military helicopters or scrambling to restart cooling pumps may not work. "It is not impossible to encase the reactors in concrete. But our priority right now is to try and cool them down first," an official from the plant operator, Tokyo Electric Power Co, told a news conference.