MBS UPDATE: RATES SLIGHTLY LOWER AGAIN

MBS bids moving up a few ticks as TSY rally. MBS is however slightly weaker vs. their benchmark big brother. Mortgage rates are once again slightly lower this morning...

APRIL FN30_______________________________

FN 4.0 -------->>>> +0-03 to 99-05 from 99-02

FN 4.5 -------->>>> +0-02 to 101-06  from 101-03

FN 5.0 -------->>>> +0-02 to 102-13 from 102-11

FN 5.5 -------->>>> +0-02 to 103-02 from 103-00

FN 6.0 -------->>>> +0-01 to 103-21 from 103-20

APRIL GN30___________________________________

GN 4.0 -------->>>> +0-01 to 99-04  from 99-03

GN 4.5 -------->>>> +0-02 to 101-10  from 101-08

GN 5.0 -------->>>> +0-01 to 102-26 from 102-25

GN 5.5 -------->>>> +0-01 to 103-13 from 103-12

GN 6.0 -------->>>> +0-01 to 103-26 from 103-25

February US CPI data revealed an overall increase in price levels of +0.4% in February  (+0.2% year over year) while core CPI increased +0.2% in February (+1.8%  year over  year). Headline CPI was pressured upward by gasoline prices which jumped 8.3% in February....doesn't make much sense given the fall of crude oil prices does it?

Although there has been a small uptick in domestic price levels over the past two months....deflation remains the bigger concern. The strength of the dollar coupled with generally low energy prices should continue to exert downward pressure on price levels. The lack of concern over inflation may be an indication that the Federal Reserve will postpone purchases of TSY debt in favor of extending Agency MBS purchases (more on this later). In regards to inflation we'd expect to hear more verbiage like this from the FOMC...

"The Committee expects that inflation pressures will remain subdued in coming quarters. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term."