6.0's still at 99-24 as the selling stalled out despite stocks moving higher with the Dow currently up 111.  Oil is back down by almost a buck.

That level on the 6.0 is two ticks up day over day, but still not enough for us to hope for a reprice for the better.  Nonetheless, after yesterday's late day selling pressure, combined with the fact that today was "CPI day" (volatile and impactful), it's a reasonable assumption that lenders priced in a little bit of that risk.  On day's like this, it's not uncommon to see lenders cough up an eighth just because the curve holds sideways momentum.

So for now, keep floating (if you're still "in the pool").  Now that we've made it through CPI and Claims, we should be able to get you out well before any potential reprice for the worse.  The bigger question enters the scene now:

with a reasonable solidy "floor" showing up in the range between 99-17 and 99-19 (i.e. failed to break through 4 times now in the last 2 weeks!).  we have a really safe foundation (assuming the floor holds) being so close to those levels.  Nowhere to go but up right?  Kinda like on "who wants to be a millionaire" when you get to 25k or whatever it was and you get to keep that no matter what.  Our old floor was at 99-00, but now that we've crested this 99-18 area we haven't gone below.  Maybe that's our $25,000 level?  It would be nice for sure.

Whatever the case, with CPI out of the way and the general sentiment amoung talking heads and analysts being that the commodity and fuel spike was a driving force in the slightly elevated reading, AND considering the fact that several metrics of the broader commodity sector are showing all time most rapid declines, the market is offsetting what would normally be a "sell heavy" bond strategy with a sort of "holding steady until more data" strategy.

A fat lot of good that does us as far as future planning as it relegates us to waiting for data to come out.  If you agree with some economists, the Jobless claims is a precursor to a deep recession.  Most of us mortgage types "feel" like it's going to get worse than most people think anyway.  If that is indeed the case, then Inflation is the devil we know--our main concern in deciding lock/float strategy.  

The ability for stocks to rally 100+ points and to STILL have MBS up 2 ticks is a nice sign.  BUT the 10 year note is up a porcine 11 ticks.  That's gap-tastic spread folks, day after day after day after day.  It's getting a little old, but here's why it's good: it can't go on forever, and assuming it can occur some time in the next 7 months (while the economy will still likely be very weak), if we can but stave off further financial-firm-related headline risk, tape-bombs, Indymac's, etc..., we have nowhere to go but tighter to treasuries.  With inflation waning and (a guy can dream) out of the picture, we could start testing those all time lows in UST's.  Combine that with tighter spread and all of the sudden you'll have a mini refi-boom on your hands. 


Oh wait, they can't qualify because of value.  Oh well...  At least you'll be able to show them attractive rates!

All of the above predicated on the hypotheticals.  I'm not necessarily leaning towards inflation waning, but just letting you know that seems to be the consensus, or at leas the consensus of the talking heads that major news outlets are giving air time.  Who knows what evil hidden agenda's they might have.

In the time it's taken me to type this, we've had ZERO movement in 6.0's, holding dead even at 99-24 (although we have seen the ask price tick from 24 to 25 and back a couple times).  Yawn....  So go ahead and take an early weekend.  Unless someone can lob a well constructed tape bomb at us or one of the three moderately important scheduled data items tomorrow throws us a major curveball, we may well not get a good deal of movement into the weekend.  But more than anything we are looking for an ABSENCE of financial firm data, unless it is to say "Shocking Secret Report Shows Fannie/Freddie Have Pirate Treasure Buried In Their Back Yards: Their Reserves Now Up By 150 trln dollars!  (Arrrrgh Matey).

All pirate humor aside, take a look at Bloomberg's Economic Calendar above.  Note historical diversions from estimates and synthesize what your "gut" tells you about the nature of tomorrow's consensus.

-2.8 would definitely be one of the more bullish readings for the NY mfg. index this year, especially on the heels of inflation.  However, other manufacturing data releases are used in deriving NY Mfg. estimates, so it's a bit of a toss up.  Still, the risk of a huge unexpected gain definitely DOES NOT supercede and equal risk of the opposite.

The Industrial Production numbers would represent a .5% decline from last month's data assuming the consensus hits.  However, the consensus of 0.0% change is not a very aggressive call one way or the other.  Both the NY numbers and this report can be "all over the place" historically.  The mitigating factor there is that the markets understand this and act accordingly to some extent.  If the numbers are wildly deviant, they likely won't be given as much credence as they would otherwise, or as much as a more "even-keeled" report.

Finally, your favorite and mine, consumer sentiment.  Recent indicators show that we may have hit bottom as far as our precipitous and catastrophic declines in Consumer Confidence/Sentiment, etc...  The consensus of 62.0 would take us back to April's levels, however.  That is a bullish consensus for sure, but analysts are banking on Dubya's good 'ol stimulus checks to have a psychological effect on the respondents polled by the University of Michigan.  That's not the only factor of course, but it is one of the factors that helps to explain why, 'all of the sudden," the consensus calls for a rise off the all time lows.  Whatever the case, it should be interesting.

What's not interesting is that we STILL haven't moved off the 99-24 level.  The good news is, I'm done typing for now.  Stay tuned for changes...