MBS MID-DAY: Outperforming Benchmarks

The recent "sideways" market has been driven by two competing trends. These can be seen in the post linked below. Both are trend channels, one bearish, one bullish. Then there's the big picture horizontal considerations presented in the first chart. Plain and Simple: We're still teetering on a directional bias shift. Support hasn't been broken yet, but you should be aware of the above inflection levels. Highly recommended reading!!!! http://www.mortgagenewsdaily.com/mortgage_rates/blog/204347.aspx

Since last check, FNCL 4.5's have moved down to a more central location relative to yesterday's range. They're currently at 101-29. Rate sheets are coming out in similar territory to yesterday's offerings. A bit of levity is being seen in the short end of the curve as the Fed's open market operation today will focus on maturities from Sept 2013 to Feb 2015, more of a benefit for the short end of the curve. Overall though, things are looking very sideways (again).

FNCL 4.5's, currently at 101-30, are right in the thick of yesterday's prevalent range from 101-28 to 101-31. 10yr notes, on the other hand, although getting a supportive bounce off longer term trendlines, subsequently saw a resistance bounce just before breaking in to yesterday's high yields. That pivot point lies at 3.356/3.359. With similar prices for MBS, expect similar rate sheets this morning, but potentially slightly hedged for weaker benchmarks.

One of the more significant trendlines over the medium to long term connects the high yield levels from late January, the late February lows and a few recent highs. It's gradually downwardly sloped and has been on of the key factors in identifying 3.39 to 3.40 as an important line in the sand this week--a target, if you will. Following an as-expected Jobless Claims number and a weaker than expected Durable Goods Report, the first move for 10yr yields has been to move down from 3.39 to 3.376. We don't have enough time or movement to consider this pivot to have held yet, but so far, so good.

*** FEB DURABLES ORDERS -0.9 PCT (CONS. +1.1 PCT) VS JAN +3.6 PCT (PREV +3.2 PCT) *** FEB DURABLES EX-TRANSPORTATION -0.6 PCT (CONS +2.0 PCT) VS JAN -3.0 PCT (PREV -3.0 PCT) *** FEB DURABLES EX-DEFENSE +0.4 PCT VS JAN +2.8 PCT (PREV +2.4 PCT) *** FEB NONDEFENSE CAP ORDERS EX-AIRCRAFT -1.3 PCT (CONS +4.5 PCT) VS JAN -6.0 PCT (PREV -6.2 PCT) *** FEB GEN. MACHINERY -4.2 PCT, ELECTRICAL EQUIPMENT +2.6 PCT, DEFENSE AIRCRAFT/PARTS -18.4 PCT

*** JOBLESS CLAIMS FELL TO 382,000 MARCH 19 WEEK (CONSENSUS 383,000) FROM 387,000 PRIOR WEEK (PREVIOUS 385,000) *** JOBLESS CLAIMS 4-WK AVG FELL TO 385,250 MARCH 19 WEEK FROM 386,750 PRIOR WEEK (PREVIOUS 386,250) *** CONTINUED CLAIMS FELL TO 3.721 MLN (CON. 3.700 MLN) MARCH 12 WEEK FROM 3.723 MLN PRIOR WEEK (PREV 3.706 MLN) *** INSURED UNEMPLOYMENT RATE UNCH AT 3.0 PCT MARCH 12 FROM 3.0 PCT PRIOR WEEK (PREV 3.0 PCT) *** JOBLESS CLAIMS 4-WK AVERAGE LOWEST SINCE JULY 2008; US CONTINUED CLAIMS LOWEST SINCE SEPT 2008