Beige Book Recap. Reprices Possible as MBS Get Sloppy

Following the 2pm release of the Fed's Beige Book, bonds are weaker and stocks are near their highs of the day, which really isn't all that high. 

Still. The MBS market just got a little sloppy and prices dipped/are still dipping to new intraday lows. We would expect to see reprices for the worse if FNCL 4.5s move and remain below 101-22.

10yr treasuries are fighting to hold on to 3.46 after trading in the 3.41's earlier today.  No big deal though. A short term chart doesnt quite put today in perspective. It feels quiet out there.  Not much going on . Making the market ripe for a little price volatility.    Treasury yields are still well within the mid-term trend though...

The downtrend is still intact.

The Fed's Beige Book is a compilation of anecdotal information and data on current economic conditions across the country. They do not represent the views of Federal Reserve officials.

Other than short term reprices for the worse, the most significant thing at stake today is the stance from which the bond market will approach Friday's Employement Situation Report.  There are a few technical studies that would indicate a more bullish approach had bonds been able to hold onto gains today or make new ones.  But with the losses, we're entering from the same defensive stance that we've been advocating. 

Here are some highlights from the Beige Book:

***  FED'S BEIGE BOOK SAYS U.S. ECONOMY CONTINUED GROWING AT MODERATE PACE IN JANUARY, EARLY FEBRUARY

***  FED SAYS RETAIL SALES INCREASED IN ALL 12 REGIONAL BANK DISTRICTS AS 2011 BEGAN

***  FED SAYS MANUFACTURERS REPORT GREATER ABILITY TO PASS THROUGH HIGHER COSTS TO CUSTOMERS

***  FED SAYS SOME RETAILERS HAVE ALREADY RAISED PRICES OR INTEND TO DO SO IN NEXT FEW MONTHS

***  FED SAYS WAGE PRESSURES 'MINIMAL' BUT MANUFACTURERS, RETAILERS SAY OTHER COSTS RISING

***  FED SAYS HOME SALES, CONSTRUCTION ACTIVITY LOW, SOME DISTRICTS SEE PICKUP IN COMMERCIAL REAL ESTATE SALES

***  FED SAYS LENDING STANDARDS STILL TIGHT, JOB MARKETS IMPROVING MODESTLY

***  FED'S BEIGE BOOK PREPARED BY ATLANTA REGIONAL BANK AND BASED ON DATA COLLECTED ON OR BEFORE FEB 18