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As the session draws closer to close, the FN 4.0 is +0-18 at 99-22 yielding 4.035% and the FN 4.5 is +0-08 at 102-01 yielding 4.252%. The secondary market current coupon is now 4.078%. The CC is +74/10yr TSY and +65/10yr swap.REPRICES FOR THE BETTER have been reported...After making much progress today, the 10yr is running into resistance at 3.32%. If yields start to rise I wouldnt be surprised to see MBS prices fall a few ticks....

MBS prices have added on 3-4 ticks from this AM's already higher levels. The 4.5 is up 9 ticks overall to 102-01. That's right, 102 as in ONE ZERO TWO. MBS closed as high as 101-31 on May 17th just before Black Wednesday hit... As we mentioned last week, at that time, treasuries were closer to 2% than 3% in the 10yr. An although the 10yr has rallied 20 ticks so far today, dropping the yield 7bps, the 2% handle is but a faded memory considering the current yield of 3.351. You'll notice in the chart below that both MBS and tsy's (and stocks for that matter) are showing some early signs of fizzle as none of the 3 appear willing to extend beyond respective resistance today. That centers on 102-00 for MBS, 1110 in the S&P and 3.35 in the 10yr Watching and waiting is about all there is at the moment... If a deal is float biased, you'd be waiting for the benefits of this rally to hit rate sheets, and then potentially watch for excessive weakness as you consider the overnight float. Lock-biased portions of the pipeline would likely be in the exact same boat, except resolved to cash in on the later day gains, whatever they might be, and without being exposed to the risk of lower prices tomorrow morning...

The stock lever is broken... Sure, it is still fairly easy to see things lining up on an intraday basis, but day over day, any positive correlation is destroyed. It's not that hard to accept that enough money is coming back off the sidelines to keep both sides of the fence green more frequently than normal. But it begs the question, when does lever reconnect? At least we know it wasn't at stocks' open this AM. Couple things to note on the the chart above... Blue line is S&P as always... And the 3.38 is thrown in for reference to a very commonly occurring price level in recent months.. Other than that, the chart shows two consecutive days of gains for both the 10yr and stocks... Again, more uncommon than not... So, is there a magic number in stocks that would prompt a bit more fear for bond prices? I'm sure there is, but if you find it, let me know... 1100 is still a contender, but if the close resembles the day so far, we'd have the first vote against such a level. Why? because we are through it today and limited reaction from bonds to the multi-month highs in stocks... But it would just be the "re-test" at this point and we'd need confirmation tomorrow.. Not only that, but we'd also need to see a decent amount of volume today, and at this point it looks like we might just make it near friday's levels. Her's the big picture of what' we're dealing with in the S and P (chart says 10yr, but it's the S&P) I don't...

Reports from fellow mortgage professionals indicate mortgage rates are holding steady, near last week's aggressive closing levels. The par 30 year conventional rate mortgage remains in the 4.625% to 4.875% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect a par rate in the 4.25% to 4.50% range with similar costs. ...

GM & GMAC, Fannie, PMI, CitiMortgage, Caliper news; fraud in Nor Cal...

The Week Ahead is busy, lots of data and Fed speakers. The trade tactic we anticipate to be a rates money mover...the unwinding of the yield curve STEEPENER trade. We expect the long end of the yield curve to recover some of the beating it has taken over the past two weeks and for MBS/TSY yield spreads to widen up as the long end of the curve outperforms "rate sheet influential" MBS coupons. The long end of the curve and 10yr TSY note has been bid well so far this morning. Currently, yielding 3.395%. The FN 4.0 is +0-06 at 99-11 yielding 4.072% and the FN 4.5 is trading +0-01 at 101-25 yielding 4.283%. The secondary market current coupon is 4.146%. ...

The week begins with a bang but ends with a whimper. A storm of data hits markets on Monday with retail sales an hour before the opening bell, plus the first look at November manufacturing and business inventories. To top off the day, Fed chairman Ben Bernanke gives a talk during the lunch hour a little after dual Treasury auctions. Later in the week markets will be looking at inflation indexes, housing construction data, the usual weekly labor report, and leading indicators. Friday ends the week with no data at all. ...

Yes, I write a lot... I'm working on it, OK!? But read every last word of this one... Once a year, I like to have a passionate revelation... Last year, it was the development of a massive triangle of competing trends that I felt were destined to signal the inception of "something really good" for mortgage rates and spreads. There was nothing especially groundbreaking about thinking that "something's gotta give" in reference to MBS into the Fall of 2008. Spreads were over 300bps--all time wides, and continuing to blow out week after week. To make matters worse, relief was so far out of sight that even the Frannie conservatorship failed to remedy the slide. You were either in one camp or another. On one side of the argument foretold the end of days for the mortgage world; an inevitable crash course that would see the stricken masses roaming distopian streets with wheel-burrows full of gold bars, water, and toilet paper to use to buy their next house... The rest of us knew (or thought we knew!) that SOMEONE or SOMETHING MUST come to the aid of the MBS market lest the real post-apocalyptic reality ensue... We got our wish with the announcement of the Fed MBS purchase which broke the back of the epic triangle's bearish line, and have never looked back. But as the year draws to a close and as we test MBS's loftiest price aspirations of all time, the BIG picture is rapidly coming into focus... At least it is for ME... Once again, there will be different...

"Social media marketing is here to stay" could very well be chalked up as the understatement of the year. Social media marketing has been on the rise for the past several years. Unfortunately, many small businesses, corporations, and independent freelancers have been slow to get on board the social networking train. ...

Heading into the 5pm marking period, the FN 4.0 is +0-08 at 99-05 yielding 4.09% and the FN 4.5 is trading +0-08 at 101-24 yielding 4.287%. The secondary market current coupon is 4.179%. The CC is +75/10yr TSY and +64/10yr swap....

MBS continue to put on show after astounding show when it comes to strength versus tsy's and strength in general... Adjusting for the effects of borrowers' right to prepay and weighting 4.0's and 4.5's to MBS production, the resulting blended, weighted yield, aka current coupon continues its trend of being "really really low," (to use the technical term!) currently at 4.23932. Some simple math shows that MBS yields remain exceedingly close to tsy yields, with the cc/10 yr spread remaining under 80bps (0.80%) at 79.03 bps... With that tightness in mind and considering the recent bullishness in MBS, is next week finally time for the bullishness to take a breather? Despite some intraday bullishness, tsy's are currently trading very close to yesterday's "going out" levels. The 2's v 10's curve remains steep, although ever-so-slightly flatter on the day at 262.8 bps... But pretty lines on charts no more predict the future than assumptions about how things SHOULD happen. If a short term bearish turning point is upon us, one also might not rule out a longer term bullish continuance to whatever extent we treat stocks as indicative of broader "recovery sentiment." Why? In short, things are getting pretty dicey for the broadest measure of the stock market with yet another failure at breaking through the 1100 barrier. In fact, the only day the S&P even made it onto a field where those sorts of performances are possible occurred...

It was a busy day in the rates market yesterday. Although several data releases needed to be digested, the main event was the 30 year bond auction. Recently, while demand for shorter maturity Treasury notes has proven stable in the "post-November 4 FOMC statement" environment, the market has forced yields higher in the long end of the yield curve. Specifically the benchmark 10yr note and the 30 year bond have taken a beating over the past two weeks. Yesterday was the first chance we had to really test market's appetite for longer dated debt investments, which have more of an influence over mortgage rates. Unfortunately, while specific buyers supported the bidding, overall demand was weak compared to previous auctions. Following the release of the auction results, MBS prices plummeted and a few lenders with itchy trigger fingers repriced for the worse. However, soonthereafter the rates market recovered all losses and prices went green on the day! By the end of the day, MBS prices were at their highest levels in quite some time. Most lenders repriced for the better as the gains held until close. To remind readers, as the price of MBS move higher, lenders are able to pass along lower mortgage rates. That momentum has carried over into today as MBS prices are once again slightly higher. ...

While intraday trade flows dont necessarily represent a long term strategy in the rates market, there is still reason to mark and highlight this event in your trade journal. Remember our commentary on the last FOMC statement?Notably the verbiage about "inflation expectations". Again, we must remind that the market is still operating with a bias towards short term trade tactics (READ MORE)....however it is very important to point out that Consumer Sentiment inflation expectations are one of the metrics the Fed indicated they would consider when deciding whether or not to raise rates....

Freddie's '10 loan limits; news from SunTrust, AgFirst, CMBA, TBI, Flagstar, USBHM...

HAPPY FRIDAY THE 13th Recap of Yesterday Jobless Claims 502,000 vs. previous 514,000. 4 week moving average down to 519,750 from 524,250 Treasury's Monthly Budget.: $176.4 billion deficit. Bigger hole than expected. Reciepts - 17.9% FHA Audit reveals FHA reserves at all time low. READ MORE Fed MBS Purchase Program Update: NY Fed buys net $13.5 billion Agency MBS. Slowing pace of purchase program offset by lack of new loan production. READ MORE Although several headlines hit the wires, most of the day's meaningful drama developed around the 30 year bond auction. Treasury auctioned $16 billion long bonds at high yield of 4.469%. Demand was relatively weak, bid to cover ratio registered at 2.26. Following the 1pm release of auction results, 10yr TSY yields rose rapidly and "rate sheet influential" MBS coupons prices plummeted. After being down as low as 100-30, the FN 4.5 went out the door +0-12 at 101-16 yielding 4.317% while the FN 4.0 ended the day +0-11 at 98-29 yielding 4.115%. The secondary market current coupon is 4.206%. The chopatility brought out a few reprices for the worse, however as both benchmark rates and production MBS coupons recovered their intraday losses after the auction...several lenders ended up repricing for the better. Matt talks techs . AQ discusses trade tactics (that doesnt count as me talking in 3rd person...haha) So Far Today SHANGHAI +0.46%, HANG SENG +0.7%, TOPIX -0.1%, NIKKEI -0.35%, CAC -0.34%, DAX -0.08%, FTSE +0.17% US Trade...