Good Morning All...

I hope your weekend went well. I'm a bit bummed because I drew the Netherlands to the win the World Cup in my "office pool".  Unforunately they lost to Spain in the last minute of extra time. BOOHISS! If they'd lifted the trophy I would've taken home $500!!! No worries. 2nd place was awarded $120.

Loan pricing is out and on average it's worse by 2.2bps. Again the biggest rebate reductions are being seen in the cluster of note rates surrounding par.   One of the lenders I study actually improved pricing but they were overhedged on Friday so more or less they're just getting back to level playing ground.

Below is a comparison of loan pricing this AM.

Buydowns are the cost of floating down to the next lowest note rate. Red is good. Black is bad. The pricing change column is a direct rebate comparison of pricing today vs. pricing on Friday. Red is bad. Black is good. 

MBS prices have generally improved since lenders published rate sheets though. The August delivery Fannie Mae 4.0 MBS coupon is +0-02 at 101-07. The August delivery Fannie Mae 4.5 MBS coupon is +0-04 at 103-19. The secondary market current coupon is 0.08bps lower at 3.792%. Current coupon yield spreads are tighter vs. benchmarks but off their firmest spreads of the session after TSYs rallied mid-morning.

Lenders who released pricing early this morning or desks that had extra juice built into rate sheets may reprice for the better.  However, although stocks are behaving in an indecisive manner,  the recent S&P futures rally through 1060 is holding and traders are testing the 1070 level. If this resistance point is broken and positive progress is held....benchmark TSYs will lose a portion of their flight to safety bid and MBS prices will back away from record highs. This would reduce the possibility of lenders repricing for the better.

HERE is an outlook for the week ahead.

NEXT EVENT:  Treasury announces the results of the $35 billion 3-year note auction at 1pm