MBS OPEN: Bonds Migrate Back to Pivot Points

Good Morning. Happy February

I finally saw Avatar. Eventhough its almost a three hour movie, Cameron kept me entertained and left me wanting more. If you havent seen it yet, dont miss the opportunity to watch in theaters, IMAX 3D if you can. James Cameron has quite the resume:  the Terminator series, Rambo, True Lies, Aquaman (fake movies count too) and now Avatar.  I suppose I should throw in Titanic for the ladies and Vic.

Both benchmarks and "Rate sheet influential" MBS coupons have found their way back toward important pivot points.

The FN 4.0 is 0-05 at 97-28 yielding 4.203% and the FN 4.5 is -0-04 at 100-29 yielding 4.413%. The secondary market current coupon is 4.382%. MBS yield spreads are tighter vs. benchmarks to start the week. The CC yield is 75 bps over the 10yr TSY yield and 63 bps above the 10 year swap rate.

10s are giving back Friday's month end rate improvements. The 3.375% coupon bearing 10 year Treasury note is -0-10 at 97-29 yielding 3.629%

NEXT EVENT: Construction Spending and ISM Manufacturing PMI at 10am

Still selling into strength...rate sheet rebate should be unchanged to start the week.