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After a concentrated blast of econ data this AM, the calendar is on break until the 5yr note auction at 1pm. Sure, there is a 4 week bill auction at 1130, but it's inconsequential. In fact, although volume is bit more robust this AM compared to yesterday, it's certainly less than the data would justify in the absence of auctions and FOMC. So as you may have been expecting anyway, the most consequential items of the day (and perhaps the week) are yet to come, and the only chance for a surge in volume comes with it. All of above notwithstanding, there was always a chance that radically unexpected results in econ data will cause volatility. But none of the data reported this AM was up to that task.. GDP matches consensus of 2.8%. Prices up less than expected (.5% vs. .8%) Corporate Profits were up sharply, but no one cares because anyone can make money when they can borrow for free and lend at 4%. Next... Case Shiller 20-city 146.51 vs 146 Consensus Consumer Confidence in at 49.5 vs. 47.0 consensus FHFA House Price Index 0% MoM change and -3.0% YoY change (previously -.3 and -3.6) State Street Index 100.8 vs 108.4 Previous The charts reflect the lack of directionality... Just as in MBS above, 10yr tsy's extended their gains yesterday and have since moved into a similarly narrow range... Stocks aren't telling much of a story either. Weakness extended from yesterday into the AM, mirroring bonds extension of strength. The AM data brought things back to some extent, but...

U.S. home prices, as measured by the 20 city index rose by 0.3% on a month over month basis, less than the anticipated 0.8% gain. The 10-city index rose 0.4% from August. According to S&P/Case Shiller data, home prices have risen for five straight months. However, as pointed out above, in August 17 of 20 cities reported month over month appreciations whereas in September only 10 of 20 cities reported month over month improvements. More below....

As mortgage banking consultants and advisers, we have an opportunity to talk to many folks in our industry on a daily basis. These folks come from all aspects of the real estate lending space – mortgage originators, mortgage bankers, warehouse lenders, banks, correspondent investors, technology companies, service providers, etc. ...

Mortgage modification divisions hiring; Large number of investor updates - why during a holiday week?...

After the release of the data, 10yr note yields are a few bps higher...but holding the overnight gains that pushed yields back into last week's range.The FN 4.0 is +0-02 at 99-21 and the FN 4.5 is +0-02 at 102-02. It is important to point out that the overnight move higher in price was not supported by heavy volume. Given the market's general lack of a directional bias and preference towards day trading....the long end of the yield curve is susceptible to profit taking at any moment. Beware of chopatility.......

With stocks falling across Asia ― the Nikkei closed down 1%, the Hang Seng lost 1.5%, and China’s CSI shed 3.2% ― one should be pretty optimistic that equities in the US are looking flat. After climbing 1.29% and 1.36% yesterday, the Dow looks to open at 10,451 this morning while the S&P 500 should open at a steady 1,106. Meanwhile, the US$ index slightly stronger this morning, oil is unchanged at $77.50, and spot gold is trading $4 higher at $1,17...

The headline may be the most exciting thing about today and does much to counter the suggestion that the journey is more important than the destination. Indeed, today's destination is much more of a conversation piece than the journey. In the interest of delaying what may or may not be perceived as "rain" on your respective parades, we'll go a bit out of order and start with the medium term picture of MBS showing a higher close than early October. Like we said, one has to go back to May 6th to find a higher close in 4.5 MBS, although you be the judge as to whether or not rates on May 6th are the same rates you're seeing today... No seriously, I'm not going to pull up the old rate sheets, so please tell us! Regardless of the "personal best" for the 2nd half of 2009, (here's the rain...) not only is it not likely to mean much yet, but outlook for rates and MBS remains cautious this week. The upper limits of the long term range will continue to suggest this until they're meaningfully broken, and as you can see in the white circle below (no belly bombs people!), nothing is meaningful yet... The obligatory long term caution aside, MBS did depart from last week's sideways trend after mid-day today... You can see the 101-27 infection point from last week come into play quite noticeably and then give way to price improvements into the close. Similarly linear and range-bound improvements in tsy's that took information from last week's...

Heading into the after hours session, the FN 4.0 is +0-05 at 99-17 yielding 4.053% and the FN 4.5 is +0-05 at 101-30 yielding 4.263%. The secondary market current coupon is 4.095%. The CC is +73/10yr TSY and +61/10yr swap. Several lenders have repriced for the better as price improvements have held since the choppy reaction the 2 yr note auction. ...

Existing-home sales surged 10.1 percent to an annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September. Sales activity is at the highest pace since February 2007 when it hit 6.55 million. Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, less than the revised for the worse 8.0-month supply which was reported in September. The national median existing-home price for all housing types was $173,100 in October, down 7.1 percent from October 2008....

Auction bullet points: $44 BLN 2-YEAR NOTES AT HIGH YIELD 0.802 PCT, AWARDS 95.78 PCT OF BIDS AT HIGH BID-TO-COVER RATIO 3.16, NON-COMP BIDS $416.6 MLN PRIMARY DEALERS TAKE $22.08 BLN OF 2-YEAR NOTES SALE, INDIRECT $19.36 BLN After the results, MBS sold off 4 ticks or so, nothing major. Tsy yields in the long end had already conceded up to around 3.4, and so only moved marginally higher before joining MBS for some moderation. Said moderation has made for more or less unchanged levels from pre-auction trading. Here's how it all looks.. So this is why we advise more patience than you might want to have following auctions... The first move down was quasi alert-worthy, but now we may be headed back to test the resistance in more positive areas of the day. Stay tuned!

As the noon hour approaches, MBS are up on the day with the 4.5 up 2 ticks to 101-27. Meanwhile, treasuries are still down on the day with the 10yr off 4 ticks, bringing the yield up to 3.381. Without support from some positive price movement in tsy's, MBS may have a tough time moving much higher. On the two day chart, we can see MBS struggle with 101-28 despite tsy yields being slightly lower than this AM: There are a couple disturbing developments in tsys that suggest they may have a tough time of their own with important technical levels. Well, at least they've had a tough time so far today in terms of the 3.38 inflection point in 10yr yields. 3.38 served as almost perfect support all week in addition to it acting as a noticeably inflection point for months. But with the slightly higher yields this AM, 10yr's basically opened above 3.38 and upon their 11AM improvements, encountered 3.38 once again, but this time, as resistance to further improvement, with a noticeable bounce right on the mark. Combine this with what we already witnessed last week in 10yr futures inability to crest the perennial high water mark at 119-29 and bonds now have the burden of proof when it comes to convincing markets they can continue improving. That's not to say they can't make a case to improve, but that until futures break 119-29, a level that coincides with 3.31--last week's resistance for yields--even an intraday improvement down past 3.38 would merely constitute a return...

Last week ended basically where it began with prices of mortgage backed securities moving sideways near record highs and mortgage rates holding steady near six month lows. MBS traded in a very narrowing range as the week progressed which allowed lenders to publish base 30 year conventional mortgage rates in the 4.625% to 4.875% range. While the week ahead is holiday shortened in observance of Thanksgiving, there is still plenty of data to take note of...housing data specifically. With MBS prices near record highs and mortgage rates near six months, I continue to advise clients and readers to lock. ...

Loan Pricing Observations; 401(k) Ramblings; Investor Updates: Wells, Flagstar, AmTrust...

In the week that was, mortgages traded in a narrowing range as 10yr TSY notes bounced back and forth between positional resistance and support. While the range bound behavior of our benchmarks contained MBS price directionality, lock desks were busy as originators took profits on peaking MBS prices and consumers pulled the trigger on six month low mortgage rates Last week the market was, for the most part, stuck in wait and see mode. While this week's schedule is jammed packed with data, auctions, and month end events, one has to wonder how the absent minds of thankful market participants will react to the confluence of data and events that fill the economic calendar this week. That said, the extent to which we are able to place indicative values on reactive price action may be limited as a holiday influenced lack of liquidity governs directional momentum. Regardless of expected seasonal slowness and an anticipated "lack of liquidity" and the market's short term, profit maximizing agenda, we do not overlook the broader themes moderating economic outlooks and media perceptions. More recently, as balance sheets are prepped for window dressing, fears of "worse to come" have re-emerged...with weakness in housing leading the way for double dippers. The week ahead offers up much to discuss in terms of the BIG PICTURE perspective, especially in terms of the health of housing.......

The US dollar is weaker, equities are higher, and gold is soaring. That’s how the Thanksgiving-shortened week is beginning after markets slid back late last week. Led by global markets, US equities are looking to open 1% higher on Monday. Conversely, Treasuries are weaker with the benchmark 10-year yield up 2 basis points at 3.38%...