The day, and week for that matter, are effectively...

• RTRS – Fed’s Dudley says much work remains to achieve Fed's dual mandate of employment, price stability
• RTRS - monetary policy will continue to do its part to support recovery
• RTRS - action on housing, fiscal policy also needed for recovery
• RTRS - pace of recovery remains sluggish, likely to slow somewhat in 2012
• RTRS -says expects moderate growth this year, but risks are skewed to downside mainly due to Europe
• RTRS – U.S. economy continues to operate with 'significant excess slack'
• RTRS - slack is putting downward pressure on trend inflation, which may be headed lower
• RTRS - says unemployment likely to remain unacceptably high for near term

The Consumer Sentiment Index for the month of January improved slightly to 75.0 from a preliminary reading of 74.0 according to University of Michigan/Thomson Reuters Survey--the highest level since February 2011.

The current conditions component rose slightly more than expected, coming in at 84.2 vs a 83.0 expectation and 82.6 in January. Expectations edged up to 69.1 from 68.4, roughly matching the 69.0 estimate.

Inflation expectations remain in check with the 1yr expectations moving up .1 and 5yr expectations down .1.

All in all, none of the reports components are far enough away from expectations or previous readings to elicit much of a market response. The biggest volumes of the day were seen just after GDP and any movement related to the Sentiment release is barely discernible. Trading will grow increasingly quiet unless acted upon by a sufficient force. Candidates for that seem mostly limited to unexpected/unscheduled headline-type market movers. Failing that, stocks and bonds might do a little tango as each look to the other for some guidance amid the lack of data. Price/yield movements are of little consequence at this point unless volumes surge.

Attorney General Eric Holder and other officials will announce the formation of the Residential Mortgage-Backed Securities Working Group TODAY, Jan. 27, 2012, at 11:30 a.m. EST.
The President this week directed Attorney General Holder to collaborate with several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This working group will be operated out of the President’s Financial Fraud Enforcement Task Force, which is chaired by Attorney General Holder.

The December Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) shows mortgage originations continued their decline from 2011's September peak, down 10.1 percent from the month before. At the same time, those loans originated over the last two years have proven to be some of the best quality originations on record. Likely a result of tighter lending requirements, 2010-11 vintage originations showed 90-day default rates below those of all other years, going back to 2005. December origination data also shows that recent prepayment activity - a key indicator of mortgage refinances - has remained strong, with 2008-09 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.

With growth coming in not only a bit tamer than forecast...

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the fourth quarter, based on more complete data, will be released on February 29, 2012.

The increase in real GDP in the fourth quarter reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, residential fixed investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending.

MBS are opening 2-3 ticks lower; S&P futures just slightly...

Attorney General Eric Holder and other officials will announce the formation of the Residential Mortgage-Backed Securities Working Group TODAY, Jan. 27, 2012, at 11:30 a.m. EST.
The President this week directed Attorney General Holder to collaborate with several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This working group will be operated out of the President’s Financial Fraud Enforcement Task Force, which is chaired by Attorney General Holder.

The December Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) shows mortgage originations continued their decline from 2011's September peak, down 10.1 percent from the month before. At the same time, those loans originated over the last two years have proven to be some of the best quality originations on record. Likely a result of tighter lending requirements, 2010-11 vintage originations showed 90-day default rates below those of all other years, going back to 2005. December origination data also shows that recent prepayment activity - a key indicator of mortgage refinances - has remained strong, with 2008-09 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.

The day, and week for that matter, are effectively...

• RTRS – Fed’s Dudley says much work remains to achieve Fed's dual mandate of employment, price stability
• RTRS - monetary policy will continue to do its part to support recovery
• RTRS - action on housing, fiscal policy also needed for recovery
• RTRS - pace of recovery remains sluggish, likely to slow somewhat in 2012
• RTRS -says expects moderate growth this year, but risks are skewed to downside mainly due to Europe
• RTRS – U.S. economy continues to operate with 'significant excess slack'
• RTRS - slack is putting downward pressure on trend inflation, which may be headed lower
• RTRS - says unemployment likely to remain unacceptably high for near term

The Consumer Sentiment Index for the month of January improved slightly to 75.0 from a preliminary reading of 74.0 according to University of Michigan/Thomson Reuters Survey--the highest level since February 2011.

The current conditions component rose slightly more than expected, coming in at 84.2 vs a 83.0 expectation and 82.6 in January. Expectations edged up to 69.1 from 68.4, roughly matching the 69.0 estimate.

Inflation expectations remain in check with the 1yr expectations moving up .1 and 5yr expectations down .1.

All in all, none of the reports components are far enough away from expectations or previous readings to elicit much of a market response. The biggest volumes of the day were seen just after GDP and any movement related to the Sentiment release is barely discernible. Trading will grow increasingly quiet unless acted upon by a sufficient force. Candidates for that seem mostly limited to unexpected/unscheduled headline-type market movers. Failing that, stocks and bonds might do a little tango as each look to the other for some guidance amid the lack of data. Price/yield movements are of little consequence at this point unless volumes surge.

Attorney General Eric Holder and other officials will announce the formation of the Residential Mortgage-Backed Securities Working Group TODAY, Jan. 27, 2012, at 11:30 a.m. EST.
The President this week directed Attorney General Holder to collaborate with several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This working group will be operated out of the President’s Financial Fraud Enforcement Task Force, which is chaired by Attorney General Holder.

The December Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) shows mortgage originations continued their decline from 2011's September peak, down 10.1 percent from the month before. At the same time, those loans originated over the last two years have proven to be some of the best quality originations on record. Likely a result of tighter lending requirements, 2010-11 vintage originations showed 90-day default rates below those of all other years, going back to 2005. December origination data also shows that recent prepayment activity - a key indicator of mortgage refinances - has remained strong, with 2008-09 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.

With growth coming in not only a bit tamer than forecast...

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the fourth quarter, based on more complete data, will be released on February 29, 2012.

The increase in real GDP in the fourth quarter reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, residential fixed investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending.

MBS are opening 2-3 ticks lower; S&P futures just slightly...

The Consumer Sentiment Index for the month of January improved slightly to 75.0 from a preliminary reading of 74.0 according to University of Michigan/Thomson Reuters Survey--the highest level since February 2011.

The current conditions component rose slightly more than expected, coming in at 84.2 vs a 83.0 expectation and 82.6 in January. Expectations edged up to 69.1 from 68.4, roughly matching the 69.0 estimate.

Inflation expectations remain in check with the 1yr expectations moving up .1 and 5yr expectations down .1.

All in all, none of the reports components are far enough away from expectations or previous readings to elicit much of a market response. The biggest volumes of the day were seen just after GDP and any movement related to the Sentiment release is barely discernible. Trading will grow increasingly quiet unless acted upon by a sufficient force. Candidates for that seem mostly limited to unexpected/unscheduled headline-type market movers. Failing that, stocks and bonds might do a little tango as each look to the other for some guidance amid the lack of data. Price/yield movements are of little consequence at this point unless volumes surge.

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the fourth quarter, based on more complete data, will be released on February 29, 2012.

The increase in real GDP in the fourth quarter reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, residential fixed investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending.

• RTRS – Fed’s Dudley says much work remains to achieve Fed's dual mandate of employment, price stability
• RTRS - monetary policy will continue to do its part to support recovery
• RTRS - action on housing, fiscal policy also needed for recovery
• RTRS - pace of recovery remains sluggish, likely to slow somewhat in 2012
• RTRS -says expects moderate growth this year, but risks are skewed to downside mainly due to Europe
• RTRS – U.S. economy continues to operate with 'significant excess slack'
• RTRS - slack is putting downward pressure on trend inflation, which may be headed lower
• RTRS - says unemployment likely to remain unacceptably high for near term