101-00 that is!  Despite some ups and downs (minor) over the last few days, the FNMA 5.5% coupon seems like it is happy "hanging out" around 101-00 in price.  If this price continues to show stability, it should translate into wholesale lenders being able to provide a 5.5% rate on a 30 year fixed at PAR or slightly under.

In news, wholesale trade greatly exceed expectations of .5% coming in at 1.1%.  In the last 6 minutes since the news, the markets have not reacted appreciably to this news.  Here are the current  bond prices:


MBS Price Data
FNMA 5.5
96-14 /16
FNMA 5.0
99-01 /02
FNMA 5.5
101-01 /02
FNMA 6.0
102-18 /19

 Another major piece of news for the markets to digest came after the closing bell last night: CitiGroup announced that it is in talks to sell 12 billion dollars of leveraged loans.  To the bulls, this is another sign that the bottom has hit and that recovery will ensue.  To the bears, this is simply some good news for liquidity--a factor that will mitigate our disaster.  Whatever the case, the news seem to be pushed to the side more or less this morning as traders are focusing on corporate earnings.  UPS in particular was out with poor earnings, to which the market has not reacted favorably. 

In mortgage-related, but unimportant news, the level of mortgage applications rose 5.4% last month.  This was in line with expectations.

It's tough to say where things will be going in the next few days.  Considering the relative stability of the MBS this morning, even in the face of the wholesale inventory report, floating makes sense until we get indication of a bull stock market or negative headlines.

Stay tuned here and the stock market and treasuries should be decent indicators of MBS today (at least they have been so far this morning,  Mortgage specific headlines can change this).  Remember, strong stocks usually raise interest rates.

We'll be back with an update on any significant data.  Until then, floating is the play.