Wholesale Inventories and Sales data printed at 10am and as expected, has been almost exclusively ignored. This is evident not only in the absence of discernible changes in volume around that time, but also the fact that the market continued trading negatively in bonds and positively in stocks despite the weaker than expected report.

Inventory growth essentially flattened out, rising 0.4 pct this month versus 1.1% in the previous month. Forecasts called for 0.6 pct growth today.

The sales component fell 0.1 pct versus a previous reading of +1.3 pct and an estimate for today of +0.8 pct. That marks the first decline in Wholesale Sales since May 2011 when they declined at a -0.3 pct pace.

Fannie 3.5's went out the door yesterday at 103-13, rolling to April Coupons which came in the door at 103-03. This morning's better-than-expected NFP caused a brief (very brief) whipsaw of negative price action for MBS, but since then, Fannie 3.5's slowly and steadily ticked into positive territory at 103-05.

10yr yields made it into the high 2.05's in the post-NFP volatility and are now back down into the 2.02's.

Things were quiet overnight with no major reaction to any of the more official Greek PSI tallies (85%+ organic, 95%+ with CACs, 5% apparently immune from CACs). Markets are probably more interested in whether or not CACs will be activated (they probably will be) and whether or not that will constitute a "credit event" that triggers CDS payouts. Both of those unknown's will be decided as early as today by meetings of the Eurogroup regarding invocation of CACs and the ISDA regarding "credit event" classification. And yes, that's all Greek to us.

The International Trade data out at the same time as NFP, despite being the widest gap since 2008, was and is a non-event in terms of market movement compared to NFP. It's roughly in line with the trend since 2009, so "widest gap since 2009" will continue to be a common theme as long as the trend continues. Nothing to get excited about even if it sounds exciting.

As to whether or not bond markets will be able to hold onto this attempt at bouncing back, we're watching levels in the mid 2.04's in 10yr notes for several reasons. Anything around or under there by this afternoon would be a major reinforcement of the long term trends and a decent set up for MBS next week. Keep in mind that the auction cycle starts up again next week though, so there may be some early preparation needs exerting some phantom pressure on bond markets today.

-Fourth quarter 2011 net income of $619 million and total other comprehensive income of $887 million resulted in total comprehensive income of $1.5 billion.

-Net worth deficit at December 31, 2011 requires Treasury draw request of $146 million, as total comprehensive income for the fourth quarter was more than offset by senior preferred dividends paid of $1.7 billion.

-Full-year 2011 net loss was $5.3 billion and total comprehensive loss was $1.2 billion. Net worth deficits during 2011 resulted in total Treasury draw requests of $7.6 billion for the year, reflecting the total comprehensive loss for the year and $6.5 billion of senior preferred dividends paid in 2011.

-In 2011, the company provided over $360 billion of liquidity to the mortgage market, helping nearly 1.9 million families finance or rent a home. This included nearly $250 billion in single-family refinance volume, resulting in an estimated $2.7 billion in aggregate annual interest savings for almost 1.2 million borrowers.

-In 2011, the company helped over 208,000 borrowers avoid foreclosure, with approximately eight out of ten of these borrowers keeping their homes.

-New single-family business acquired after 2008 continues to demonstrate strong credit quality and now represents over 50 percent of the company’s single-family credit guarantee portfolio.

-Single-family serious delinquency rate was 3.58 percent at December 31, 2011, remaining substantially below industry benchmarks.

* Trade Deficit $52.57 Bln (Consensus $49.00 Bln)
* Dec Deficit revised up to $50.42 Bln (Prev $48.80 Bln)
* Exports +1.4 Pct Vs Dec +0.4 Pct
* Imports +2.1 Pct Vs Dec +1.6 Pct
* Goods Deficit $67.48 Bln, Services Surplus $14.92 Bln
* Exports $180.81 Bln Vs Dec $178.23 Bln
* Imports Record High $233.37 Bln Vs Dec $228.65 Bln
*Capital Goods Imports Record High $44.73 Bln Vs Dec Imports $44.68 Bln
*US/China Deficit $26.02 Bln Vs Dec Deficit $23.14 Bln
*OPEC Jan Trade Deficit $10.02 Bln Vs Dec Deficit $9.10 Bln
*Oil Import Price $103.81/Bbl Vs Dec $104.13/Bbl
* Oil Up +23.1 Pct From Jan'11 $84.34/Bbl
*Trade Deficit Widest Since Oct 2008 ($59.5 Bln)

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total January exports of $180.8 billion and imports of $233.4 billion resulted in a goods and services deficit of $52.6 billion, up from $50.4 billion in December, revised. January exports were $2.6 billion more than December exports of $178.2 billion. January imports were $4.7 billion more than December imports of $228.7 billion.

In January, the goods deficit increased $2.4 billion from December to $67.5 billion, and the services surplus increased $0.3 billion from December to $14.9 billion. Exports of goods increased $1.9 billion to $128.6 billion, and imports of goods increased $4.3 billion to $196.1 billion. Exports of services increased $0.7 billion to $52.2 billion, and imports of services increased $0.4 billion to $37.3 billion.

The goods and services deficit increased $5.0 billion from January 2011 to January 2012. Exports were up $12.9 billion, or 7.7 percent, and imports were up $18.0 billion, or 8.4 percent.

* Nonfarm Payrolls +227k (est. 210,000)
* Jan revised to284k from 243k
* Dec revised to 223k from 203k
* Private Sector Jobs +233k (est. 225k)
* Government Jobs -6,000
* Jobless Rate 8.3 Pct (Consensus 8.3 Pct)
* Labor Force Participation Rate 63.9 (up 0.2)
* factory jobs +31k (cons. +25k) vs jan +52k

Slightly better than expected headline NFP is a relative non-issue in this month's report compared to the healthy revisions of the previous months.

The fact that labor participation rate actually rose by 0.2 removes some of the ammunition that the naysayers would normally use to dismiss a positive employment report. Granted, the labor market is far from "fixed" and far from "healthy," but the relatively recent theme of marginal improvement continues.

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