Bond markets managed to hold their ground against earlier "risk-on" move around 1:15pm following a technical bounce in the EUR/USD (1.3072). As soon as Euros topped out at 1.3090, so did Treasury yields though equities continued to advance until about 2:30pm. MBS experienced all of the above drama merely as a move down to 103-14 from 103-18 highs.

When stocks finally turned the corner, bond markets improved further, with 10yr yields making modest run lower into the 3pm official close. Given that today is month end, that time frame saw an understandably higher level of activity leading up to the 3pm cut off. Equities have continued to fall since then, and again ratcheted lower after the cash close for stocks.

All things considered, bond markets haven't done much to follow equities compared to their normal stance. 10's have resisted a break below 1.88 and MBS are still capped by their 103-18 high in Fannie 3.0s. Even so, being at the highs of the day, with stable pricing in the rear-view is a net-positive for MBS, and reprice risk is tilted positively if it has any sort of tilt. Keep in mind that month-end pricing strategies can vary.

There's not necessarily an increase in negative reprice risk at the moment, but we wanted to let you know that Treasuries and Equities have taken off a bit, with respect to the sideways grinds that dominated mid-morning trading. This isn't a huge move, with 10's only going from 1.89 to .190 over 10 minutes, but it was fairly abrupt and pulled MBS off the highs of their super tight range.

Fannie 3.0s are down from their 103-18 highs to their 103-15 lows currently, and at this point, we'd be more interested in paying attention to incoming prices as related markets seem to be stirring. Bottom line, sleepy day so far, but may be time to wake up and look outside. Not stormy yet, but some of the clouds look like they're at least thinking about it.

Highlights:
- Originations rise to $553 billion
- 210k new foreclosure notations, a 13.3% decrease
- Delinquency rate down to 5.6% from 5.9%
- HELOC delinquency drops attributed to charge-offs

Aggregate consumer debt increased slightly in the fourth quarter, by $31 billion, a reversal from the downward trend that has been in place since the fourth quarter of 2008. As of December 31, 2012, total consumer indebtedness was $11.34 trillion, 0.3% higher than its level in the third quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.

- PMI 56.8 vs 54.3 Consensus, 55.6 previously
- New Orders 60.2 vs 58.2 previously
- employment 55.7 vs 58.0 previously

The Chicago Purchasing Managers reported the Chicago Business Barometer rose for a second month, up 1.2 points to 56.8, its highest level since last March. Improvement in the Business Barometer was concurrent with gains in New Orders, Order Backlogs, and Supplier Deliveries while Production and Employment expanded at a slower pace.

US Treasuries were steady-handed in both Asian and European hours overnight. Despite choppier movement in German Bunds and Euros, 10's coasted gently lower in yield into domestic hours. Once again, 1.87+ acted as a short term, mid-range resistance level, leaving 10's at 1.879 at 8am.

Since then, there's been only a moderate reaction to stronger-than-expected Jobless Claims data, mostly offset by weaker-than-expected GDP, at least to whatever extent data is of any concern to this market (and it hasn't been so far this week). 10's moved moderately higher and Fannie 3.0 MBS came off their 103-18 highs but remain 6 ticks higher on the day at 103-16. Equities futures win the "most sideways" award overnight and we're looking forward to the cash open to see if another ambush awaits us (like yesterday).

All that to say that the, while bond markets resisted the intensity of movement suggested by the stock lever, the lever is still very much in play in terms of acting to suggest the direction that bonds move. It's not necessarily a case of motivation traveling strictly downhill from one to the other, but it was certainly the driver yesterday.

Chicago PMI at 9:45am is the next relevant econ data release. Looks like we'll be holding our ground at least into the equities open if not into Chi-PMI data itself. Reassessing from there.

In the week ending February 23, the advance figure for seasonally adjusted initial claims was 344,000, a decrease of 22,000 from the previous week's revised figure of 366,000. The 4-week moving average was 355,000, a decrease of 6,750 from the previous week's revised average of 361,750.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending February 16, a decrease of 0.1 percentage point from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 16 was 3,074,000, a decrease of 91,000 from the preceding week's revised level of 3,165,000. The 4-week moving average was 3,155,000, a decrease of 35,500 from the preceding week's revised average of 3,190,500.

- Q4 Prelim GDP +0.1 vs +0.5 Consensus, -0.1 Previous
- Business Inventory Change +$12 bln vs +$20bln Previous
- Inventories cut 1.55% from GDP change
- +0.1% rise = smallest since Q1 2011

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 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, real GDP declined 0.1 percent. The upward revision to the percent change in real GDP is smaller than the average revision from the advance to second estimate of 0.5 percentage point. While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month.

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

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

Bond markets managed to hold their ground against earlier "risk-on" move around 1:15pm following a technical bounce in the EUR/USD (1.3072). As soon as Euros topped out at 1.3090, so did Treasury yields though equities continued to advance until about 2:30pm. MBS experienced all of the above drama merely as a move down to 103-14 from 103-18 highs.

When stocks finally turned the corner, bond markets improved further, with 10yr yields making modest run lower into the 3pm official close. Given that today is month end, that time frame saw an understandably higher level of activity leading up to the 3pm cut off. Equities have continued to fall since then, and again ratcheted lower after the cash close for stocks.

All things considered, bond markets haven't done much to follow equities compared to their normal stance. 10's have resisted a break below 1.88 and MBS are still capped by their 103-18 high in Fannie 3.0s. Even so, being at the highs of the day, with stable pricing in the rear-view is a net-positive for MBS, and reprice risk is tilted positively if it has any sort of tilt. Keep in mind that month-end pricing strategies can vary.

There's not necessarily an increase in negative reprice risk at the moment, but we wanted to let you know that Treasuries and Equities have taken off a bit, with respect to the sideways grinds that dominated mid-morning trading. This isn't a huge move, with 10's only going from 1.89 to .190 over 10 minutes, but it was fairly abrupt and pulled MBS off the highs of their super tight range.

Fannie 3.0s are down from their 103-18 highs to their 103-15 lows currently, and at this point, we'd be more interested in paying attention to incoming prices as related markets seem to be stirring. Bottom line, sleepy day so far, but may be time to wake up and look outside. Not stormy yet, but some of the clouds look like they're at least thinking about it.

Highlights:
- Originations rise to $553 billion
- 210k new foreclosure notations, a 13.3% decrease
- Delinquency rate down to 5.6% from 5.9%
- HELOC delinquency drops attributed to charge-offs

Aggregate consumer debt increased slightly in the fourth quarter, by $31 billion, a reversal from the downward trend that has been in place since the fourth quarter of 2008. As of December 31, 2012, total consumer indebtedness was $11.34 trillion, 0.3% higher than its level in the third quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.

- PMI 56.8 vs 54.3 Consensus, 55.6 previously
- New Orders 60.2 vs 58.2 previously
- employment 55.7 vs 58.0 previously

The Chicago Purchasing Managers reported the Chicago Business Barometer rose for a second month, up 1.2 points to 56.8, its highest level since last March. Improvement in the Business Barometer was concurrent with gains in New Orders, Order Backlogs, and Supplier Deliveries while Production and Employment expanded at a slower pace.

US Treasuries were steady-handed in both Asian and European hours overnight. Despite choppier movement in German Bunds and Euros, 10's coasted gently lower in yield into domestic hours. Once again, 1.87+ acted as a short term, mid-range resistance level, leaving 10's at 1.879 at 8am.

Since then, there's been only a moderate reaction to stronger-than-expected Jobless Claims data, mostly offset by weaker-than-expected GDP, at least to whatever extent data is of any concern to this market (and it hasn't been so far this week). 10's moved moderately higher and Fannie 3.0 MBS came off their 103-18 highs but remain 6 ticks higher on the day at 103-16. Equities futures win the "most sideways" award overnight and we're looking forward to the cash open to see if another ambush awaits us (like yesterday).

All that to say that the, while bond markets resisted the intensity of movement suggested by the stock lever, the lever is still very much in play in terms of acting to suggest the direction that bonds move. It's not necessarily a case of motivation traveling strictly downhill from one to the other, but it was certainly the driver yesterday.

Chicago PMI at 9:45am is the next relevant econ data release. Looks like we'll be holding our ground at least into the equities open if not into Chi-PMI data itself. Reassessing from there.

In the week ending February 23, the advance figure for seasonally adjusted initial claims was 344,000, a decrease of 22,000 from the previous week's revised figure of 366,000. The 4-week moving average was 355,000, a decrease of 6,750 from the previous week's revised average of 361,750.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending February 16, a decrease of 0.1 percentage point from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 16 was 3,074,000, a decrease of 91,000 from the preceding week's revised level of 3,165,000. The 4-week moving average was 3,155,000, a decrease of 35,500 from the preceding week's revised average of 3,190,500.

- Q4 Prelim GDP +0.1 vs +0.5 Consensus, -0.1 Previous
- Business Inventory Change +$12 bln vs +$20bln Previous
- Inventories cut 1.55% from GDP change
- +0.1% rise = smallest since Q1 2011

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 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, real GDP declined 0.1 percent. The upward revision to the percent change in real GDP is smaller than the average revision from the advance to second estimate of 0.5 percentage point. While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month.

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

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

- PMI 56.8 vs 54.3 Consensus, 55.6 previously
- New Orders 60.2 vs 58.2 previously
- employment 55.7 vs 58.0 previously

The Chicago Purchasing Managers reported the Chicago Business Barometer rose for a second month, up 1.2 points to 56.8, its highest level since last March. Improvement in the Business Barometer was concurrent with gains in New Orders, Order Backlogs, and Supplier Deliveries while Production and Employment expanded at a slower pace.

In the week ending February 23, the advance figure for seasonally adjusted initial claims was 344,000, a decrease of 22,000 from the previous week's revised figure of 366,000. The 4-week moving average was 355,000, a decrease of 6,750 from the previous week's revised average of 361,750.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending February 16, a decrease of 0.1 percentage point from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 16 was 3,074,000, a decrease of 91,000 from the preceding week's revised level of 3,165,000. The 4-week moving average was 3,155,000, a decrease of 35,500 from the preceding week's revised average of 3,190,500.

- Q4 Prelim GDP +0.1 vs +0.5 Consensus, -0.1 Previous
- Business Inventory Change +$12 bln vs +$20bln Previous
- Inventories cut 1.55% from GDP change
- +0.1% rise = smallest since Q1 2011

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 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, real GDP declined 0.1 percent. The upward revision to the percent change in real GDP is smaller than the average revision from the advance to second estimate of 0.5 percentage point. While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month.

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

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

Highlights:
- Originations rise to $553 billion
- 210k new foreclosure notations, a 13.3% decrease
- Delinquency rate down to 5.6% from 5.9%
- HELOC delinquency drops attributed to charge-offs

Aggregate consumer debt increased slightly in the fourth quarter, by $31 billion, a reversal from the downward trend that has been in place since the fourth quarter of 2008. As of December 31, 2012, total consumer indebtedness was $11.34 trillion, 0.3% higher than its level in the third quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.