MBS MID-DAY: 12/14/2011

Domestic bond markets are beginning the day in generally the same territory as yesterday's close. Fannie 3.5's are unchanged, as are 10yr yields. Stock futures are within a point of their 4pm levels from yesterday as well. We rarely see all 3 of these markets pull this off, and on such occasions, there's a chance that the 3 instances of "unchanged" are merely serendipitous stopping points after a choppy overnight session.

Last night was anything but choppy. 10's stayed in a range of 1.96 to 1.99 and S&P futures never moved more than 5 pts in either direction from current levels. To top it all off, volume was quite light.

The quietness isn't for lack of tradeable data. Some highlights:

-German Cabinet agreed to re-up their "Soffin" bank rescue fund

- EU Industrial Output is +1.3% year-over year vs +2.1% forecast

-Italy's 5yr auction set a Euro-Era high at 6.47 vs 6.29

-The head of Italy's biggest union said the country's at risk of "social explosion" over recent austerity measures

and a Reuters poll shows about 50% of economists think the Fed will do a QE3 in 2012

The most entertaining newswire, hitting earlier this morning would have to be from IMF's Blanchard, who seems to have stated the obvious in discussing the various policy-based responses the EU has to the current crisis:

"Learning how to use all these tools is incredible complex."

Amen Blanchard... Amen.