MBS MID-DAY: Sideways Session

ALERT: Ginnie Mae Price Change Discrepancy

FNCL 4.5's are currently in the middle of their 4 tick range this morning at 101-11, seeing support around 101-09 and resistance around 101-12. For benchmark 10's the support level has been fairly linearly established at 3.53, though we wouldn't be surprised to see some sort of concession built in leading up to the 1pm auction. The morning remains quiet and slow.

Freddie Mac today announced it has selected Green River Capital based in West Valley City, UT and Atlas REO Services of San Diego, CA to provide sales and disposition support to HomeSteps®, the company's real estate sales unit. HomeSteps markets a nationwide selection of Freddie Mac-owned homes through local real estate brokers. KEYPOINTS: • HomeSteps is contracting with Green River Capital and Atlas REO Services to expand its capacity to handle expected increases in REO inflow volumes. • Green River Capital and Atlas REO Services are specialty REO management and loss mitigation providers for mortgage servicers and other financial services companies. •HomeSteps has had a similar contract with Vendor Resource Management (VRM), a minority-owned company, based in Carrollton, TX since 2006. • The three third-party vendors will support HomeSteps' core sales and disposition functions, such as valuation, market strategy, listing and closing. For more information on HomeSteps, see

*** WHOLESALE INVENTORIES +1.1 PCT (CONSENSUS +0.8 PCT) VS DEC +1.3 PCT (PREV +1.0 PCT) *** WHOLESALE SALES +3.4 PCT (CONSENSUS +0.5 PCT) VS DEC +1.1 PCT (PREV +0.4 PCT) *** STOCK/SALES RATIO 1.13 MONTHS' WORTH VS DEC 1.15 MONTHS *** WHOLESALE SALES INCREASE LARGEST SINCE MATCHING +3.4 PCT IN NOV 2009 *** STOCK/SALES RATIO LOWEST SINCE MATCHING 1.13 MONTHS' WORTH IN APRIL 2010 *** WHOLESALE PETROLEUM SALES RISE LARGEST SINCE +13.2 PCT IN NOV 2007

Please note that the "change" column for GNMA coupons is currently inaccurate. FNMA and FHLMC coupons are correctly displaying April settlement. GNMA, however, should not yet be displaying April settlements, and while the prices are correct for April GNMA's, the change column is marking the difference between last night's March prices and this morning's April prices, making them look much worse than the rest of the market when in fact, they are not.

FNCL 4.5's have ticked back up to 101-12, but the fact that we're even mentioning a 1 tick change should tell you how quiet markets are so far this morning. Things are slightly more exciting in benchmarks as the 10yr note ticks down into mid-term resistance in the 3.51's. We'd expect another small bout of indecision here before moving lower, but impending Wholesale Trade data at 10am stands an outside chance of moving markets enough for that to occur.

In short, medium, and long term charts, there is some upwardly sloped resistance facing 10yr notes. Gains have paused this morning near this zone with yields currently at 3.525. Hourly charts would allow yields as low as the 3.51's without breaking the resistance, so it will gain validity if 3.51's hold into the 10yr note auction. A bullish reaction to the auction could help us break lower. FNCL 4.5's met their own resistance at 101-12 and are currently at 101-11, but overall, trading remains quiet and we'd be more willing to assign technical significance to higher volume movements that are more likely to be seen after the auction and through the rest of the week.

Overnight volume in treasuries has been lighter than normal as the week has offered very little data thus far, and a 3 year auction that didn't inspire any major directionality. And so it is that we find ourselves waiting for the 10yr note auction at 1pm. 10's are currently a few bps better at 3.523. Factoring our the effects of the roll, FNCL 4.5's are several ticks better as well at 101-12, up from a post-roll 101-07.