Tomorrow will host the lion's share of this week's domestic economic data after 3 previous days with only 1 report each and a Friday that's completely silent. Jobless Claims kicks things off at 830am as well as Fed Speak from Chuck Evans. At 10am, another econ report and another Fed Speaker, this time it's the Philly Fed Survey in a duet with "the Ben" himself, testifying in the Senate on financial reform. Speaking of financial reform, to say that this would be the center of discussion in the 2nd of a 2 day summit in Europe would be putting it lightly. Top officials will continue sorting out how best to deal with the situation in Greece, among other things, and unexpected headlines arising from the summit continue to be potential domestic market movers. We'll also get FHFA's home price index as well as Leading indicators at 10am, but the aforementioned items are the most likely candidates to move markets. For a complete look at forecasts and such, tune into the following link:

(Reuters) - The Federal Reserve said on Wednesday that Wells Fargo & Co agreed to pay $85 million in a civil penalty and will compensate prime borrowers who were allegedly steered into more costly subprime loans. The Fed said the bank might have to pay an additional $1,000 to $20,000 to each borrower affected by the alleged faulty mortgage practices. The number of borrowers who may be compensated is estimated to be between 3,700 and possibly more than 10,000, according to the Fed.

Stepping back from this morning's volatility for a slightly bigger-picture look at MBS and Treasuries, the sense of "SIDEWAYS" is once again overwhelming. Both markets are trading inside yesterdays's ranges (you may have heard us mention "inside days" in the past). But despite the fact that highs vs lows are less extreme than yesterday, and even without a strong continuation of the recent turn around in MBS, Fannie 4.0s at 100-27 are still fairly close to their highs of both today and yesterday. That's good to see considering 10yr notes are much weaker by comparison, relative to their 2 day range. In terms of day over day price change, MBS are down 2 ticks versus 10yr notes down 13 ticks. If we had to wager a guess, we'd probably still be more defensive against potential price losses than we would be hopeful for potential price gains.

A few seconds after hitting new lows of the day on a fairly steep little sell-off, MBS prices turned around and put in an equally steep rally before leveling off in the middle of the day's range. Since then, they've added to those gains even further and are now in line with their best levels of the day, 100-28 in Fannie 4.0's. 10yr notes, however, are not at their best levels of the day, more like mid-range, currently 2.918 with the extremes lying at 2.94 and the high 2.89's. If someone forced us to mention the word "reprice" in the near future, we'd say we're no longer seeing a likelihood of reprices for the worse.