It's been a light day for new originations so far in MBS with current totals in Fannie/Freddie 30yr Fixed around 1/4 to 1/3 of their recent averages. That light supply environment, in conjunction with a decent enough rally in broader bond markets has helped lift production MBS to their highest levels since last Thursday.

Additional longer term charts in the following post:

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,230.0 billion, up 0.7 percent (±0.3%) from November 2011 and up 8.9 percent (±0.4%) from December 2010.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,555.5 billion, up 0.4 percent (±0.2%) from November 2011 and up 7.7 percent (±0.4%) from December 2010.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of December was 1.26. The December 2010 ratio was 1.28.

• RTRS- BUSINESS INVENTORIES +0.4 PCT (CONSENSUS +0.5 PCT) VS NOV +0.3 PCT (PREV +0.3 PCT)
• RTRS- BUSINESS SALES +0.7 PCT VS NOV +0.4 PCT (PREV +0.3 PCT)
• RTRS- INVENTORY/SALES RATIO 1.26 MONTHS' WORTH VS NOV 1.27 MONTHS
• RTRS- BUSINESS SALES RISE LARGEST SINCE JULY 2011 (+0.7 PCT)

The knee-jerk reaction to a weaker-than-expected Retail Sales headline saw bond markets improve slightly. Beyond the challenge presented to any of today's data by tomorrow's looming Eurogroup vote on Greece's bailout, the risk is that the current reaction will be short lived of its own accord. To that end, we'd consider that January Retail Sales did, in fact, turn positive with respect to the core reading, which excludes auto sales.

While autos account for about 1/5th of the Retail Sales figure, the core is a closely watched component of the report, today showing +0.7 pct versus a +0.5 pct consensus and reversing last month's -0.5 pct decline. It should be noted, however, that December is generally expected to be a slow month in terms of Auto sales, thus the percentage gains in January are less of an economically positive development. When markets then consider that autos actually detracted from the headline despite the better-than-expected percentage gains, there's enough economic bearishness there to justify the initial positive moves for bond markets.

10yr yields are currently down to 1.948, S&P futures are off 5 points and MBS are 5 ticks higher on the day at 103-20, currently trading over the important 103-18 pivot point for the first time in several sessions. In fact, this is the only one of two times that Fannie 3.5's have decidedly crossed 103-18 since late January. That bodes well for morning rate sheets, should it continue to be the case.

U.S. import prices rose 0.3 percent in January, the U.S. Bureau of Labor Statistics reported today, after ticking down 0.1 percent in December. Higher prices for both fuel and nonfuel imports contributed to the January increase. Prices for U.S. exports also advanced in January, rising 0.2 percent following a 0.5 percent decline the previous month.

• RTRS- IMPORT PRICES +0.3 PCT (CONS. +0.2 PCT) VS DEC -0.1 PCT
• RTRS- EXPORT PRICES +0.2 PCT (CONSENSUS +0.2 PCT) VS DEC -0.5 PCT
• RTRS- PETROLEUM IMPORT PRICES +1.2 PCT VS DEC -0.5 PCT
• RTRS- YEAR-OVER-YEAR IMPORT PRICES +7.1 PCT, EXPORT PRICES +2.5 PCT
• RTRS- NON-PETROLEUM IMPORT PRICES UNCHANGED, YEAR-OVER-YEAR +2.5 PCT

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $401.4 billion, an increase of 0.4 percent (±0.5%)* from the previous month and 5.8 percent (±0.7%) above January 2011. Total sales for the November 2011 through January 2012 period were up 6.3 percent (±0.5%) from the same period a year ago. The November to December 2011 percent change was revised from 0.1 percent (±0.5)* to virtually unchanged (±0.3%)*.

Retail trade sales were up 0.4 percent (±0.5%)* from December 2011 and 5.5 percent (±0.7%) above last year. Food services and drinking places sales were up 8.2 percent (±1.8%) from January 2011 and building material and garden equipment and supplies dealers were up 8.1 percent (±2.6%) from last year.

• RTRS- RETAIL SALES +0.4 PCT (CONSENSUS +0.7 PCT) VS DEC 0.0 PCT (PREV +0.1 PCT)
• RTRS- RETAIL SALES EX-AUTOS +0.7 PCT (CONS +0.5 PCT) VS DEC -0.5 PCT (PREV -0.2 PCT)
• RTRS- RETAIL SALES EX-AUTOS/GAS/BUILDING MATERIALS +0.7 PCT VS DEC -0.4 PCT (PREV -0.1 PCT)
• RTRS- RETAIL SALES EX-AUTOS/GASOLINE +0.6 PCT VS DEC -0.2 PCT (PREV 0.0 PCT)
• RTRS- EX-GASOLINE SALES +0.3 PCT VS DEC +0.4 PCT
• RTRS- GASOLINE SALES +1.4 PCT, BIGGEST RISE SINCE MARCH 2011, VS DEC -2.6 PCT
• RTRS- CARS/PARTS SALES -1.1 PCT VS DEC +2.5 PCT
• RTRS- RETAIL SALES EX-AUTOS RISE LARGEST SINCE MARCH 2011 (+1.2 PCT)