MBS MID-DAY: Off Intraday Price Lows

FNCL 4.5's are 2 ticks better at 101-08 following Business Inventories and Sales data released at 10am. S&P's dropped about a point and 10yr yields fell to 3.52 before bouncing back up to 3.524. This was the last piece of scheduled economic data before this afternoon's 10yr Treasury auction at 1pm which is expected to be the next major market mover of the day.

10:01AM : Feb business inventories rose 0.5 percent

* U.S. FEB BUSINESS INVENTORIES +0.5 PCT (CONSENSUS +0.8 PCT) VS JAN +1.0 PCT (PREV +0.9 PCT) * U.S. FEB BUSINESS SALES +0.2 PCT VS JAN +2.0 PCT (PREV +2.0 PCT) * U.S. FEB INVENTORY/SALES RATIO 1.24 MONTHS' WORTH VS JAN 1.24 MONTHS * U.S. FEB BUSINESS INVENTORIES AT $1.458 TRLN, HIGHEST SINCE DEC 2008 ($1.476 TRLN) * U.S. FEB BUSINESS SALES READING WEAKEST SINCE JUNE 2010 (-0.4 PCT)

9:21AM : IMF Scolds Europe, Warns U.S. They're Next

Simply put, European banks are going to need more capital The International Monetary Fund said today. The IMF further warned "It is imperative that weak banks raise capital to avoid a pernicious cycle of deleveraging, weak credit growth, and falling asset prices." The debt set to mature over the next few years is of particular concern. But the warnings weren't limited to Europe. The IMF said that US and Japan were also "Living Dangerously," citing the delicate dance of managing deficits without adversely impacting the economic recovery. "While the United States and Japan continue to benefit from low current (borrowing) rates, both are very sensitive to a potential rise in funding costs," it said.

9:03AM : MBS Down Slightly After Retail Sales

"Slightly" really is the operative word here... Any time the charts make that straight-down kinda movement, things can look a bit grim, but note the fairly narrow range over the past 2 days. The entire chart in FNCL 4.5's only covers 9 ticks. This morning's drop from the time of retail sales to now? A mere 2.5 ticks... Not too shabby, especially considering that benchmark 10yr notes have made several supportive bounce-type moves before breaking through yesterday's high yields around 3.54. Even then, we'd be OK seeing 10's up to 3.55/56 this morning ahead of the auction. Then there's the auction! Looks like that's where volume will be focused today as this morning's data really hasn't drawn out nearly as much as yesterday morning over the same time period. So if the auction is positive for bond markets, the fragile and ethereal hope of a broader rates rally remains. Levels: FNCL 4.5's down 6 ticks at 101-07. 10yr note yields up 4.17 bps at 3.5337.

8:42AM : JPM Chase Conference Call on Foreclosures

*JPMORGAN CHASE: WE EXPECT CONSENT ORDER FROM OCC AND FED ON MORTGAGES LATER TODAY * JPMORGAN CHASE: WE EXPECT CONSENT ORDER TO ADDRESS WEAKNESSES IN CONTROLS AND ISSUES ON FORECLOSURE AFFADAVITS * JPMORGAN CHASE: EVENTUALLY I'M SURE THERE WILL BE PENALTIES ON FORECLOSURE MATTERS * JPMORGAN CHASE CEO: A GOOD GLOBAL FORECLOSURE SETTLEMENT WOULD BE GOOD FOR EVERYBODY, INCLUDING HOUSING MARKET * JPMORGAN CHASE CEO: IT IS POSSIBLE THAT SOME OF THE FORECLOSURE SETTLEMENTS WITH THE GOVERNMENT COULD INCREASE COSTS OF MORTGAGES TO CONSUMERS -MEDIA CONFERENCE CALL

8:31AM : DATA FLASH: RETAIL SALES WEAKEST SINCE JUNE 2010

* US MARCH RETAIL SALES +0.4 PCT (CONSENSUS +0.5 PCT) VS FEB +1.1 PCT (PREV +1.0 PCT) * US MARCH RETAIL SALES EX-AUTOS +0.8 PCT (CONS +0.7 PCT) VS FEB +1.1 PCT (PREV +0.7 PCT) * US MARCH RETAIL SALES EX-GASOLINE +0.1 PCT VS FEB +0.9 PCT * US MARCH RETAIL SALES EX-AUTOS/GAS/BUILDING MATERIALS +0.4 PCT VS FEB +1.1 PCT * US MARCH GASOLINE SALES +2.6 PCT VS FEB +2.4 PCT * US MARCH CARS/PARTS SALES -1.7 PCT VS FEB +1.0 PCT * US MARCH RETAIL SALES READING WEAKEST SINCE JUNE 2010 (-0.3 PCT)

8:14AM : New MBS Commentary Post

The Day Ahead: Retail Sales, $21 Billion 10s, Beige Book, Budget Politics

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .

Adam Quinones : "all about production Brent. Margins dont matter much when production is drying up."

Brent Borcherding : "Or how long Big Retail can afford to work on the smaller margins..."

Brent Borcherding : "It's interesting, AQ. I'm curious to see how this shakes out for many you have less contorl on thier pricing..."

Adam Quinones : "me Brent me"

Brent Borcherding : "Curious regarding pricing...Are any of you, or all of you, seeing the gap in pricing between yourself and Big Retail shrinking?"

Matthew Graham : "stocks on their best winning streak of the morning, S&P near that 1319 level from yesterday"

Andrew Horowitz : "here is a perfect example ..Philadelphia, my hometown just held the first sheriff sales since November moratorium last week, there were more than 2000 on the docket just for the one day"

Andrew Horowitz : "and with property values expected to take another turn down"

Adam Quinones : "you dont Andy!"

Andrew Horowitz : "how do you have a true recovery without the housing sector"

Adam Quinones : "higher gas prices will help GDP through greater dollar amount of Retail Sales ..funny!"

Andrew Horowitz : "far cry from the high 3's low 4's figure most were predicting"

Andrew Horowitz : "especially with the weak retail sales figure from this morning"

Andrew Horowitz : "1st quarter gdp figures will now be n the 2.00-2.5 range"

Matthew Graham : "again: inventories themselves are part of the GDP figure"

Adam Quinones : "my comment was geared toward the calculation of GDP though...inventory growth is a positive for GDP growth. I was making a simple statement that below expectation inventory growth would have a negative impact on 1Q GDP numbers."

Adam Quinones : "can be Scott...can also mean businesses are managing inventory as demand comes in the door to keep costs low."

Scott Valins : "It's a signal of future business spending because companies are more likely to purchase goods once they have depleted inventories"

Scott Valins : "AQ can you elaborate? Doesnt low inventories mean higher product sales? not in the case of biz inv?"

Matthew Graham : "bounce at 3.52, back up to 3.524 again"

Victor Burek : "here comes more downgrades"

Adam Quinones : "low inventories means lower than expected 1Q GDP growth...here come the downgrades."

Scott Valins : "inventories high means not getting rid of product so low sales and also less need for labor to build up more inventory?"

Matthew Graham : "Inventories high, but miss expectations, Sales low"

Adam Quinones : "politics just puffery right now."

Adam Quinones : "intraday? 10yr auction."

James Carville : "what has the largest impact on today's momentum, the President's speech?"

Adam Quinones : "stocks just dipped....I think that's why"

Adam Quinones : " 09:43 13Apr11 RTRS-JPMORGAN CHASE CEO: 'I WOULDN'T BE LOOKING FOR A DIVIDEND INCREASE IF I WERE YOU' OVER THE NEXT COUPLE OF QUARTERS - ANALYST CALL "

Matthew Graham : " especially with volume about half what it was yesterday, and with a 10yr auction ahead"

Matthew Graham : "2.5 ticks sell-off I can live with though"

MMNJ : "gm...looks like the usual early selloff / slow steady recovery formula is alive and well"

Matthew Graham : "10's really look determined to stay under yesterday's high yields. Keeping float alive for now"

Andrew Horowitz : "good move Joey"

Joey Hansen : "i almost floated a couple last night but locked them instead. looks like that was a good decision."