April 9th's Mortgage Market Update

What’s more amazing: the fact that Fannie 3.5s have rallied nearly 2 full points in the past few days or that the Masters champion is the first person named Bubba to win a tournament in the state of Georgia?   It’s game on again for QE3 after a disappointing non-farm payrolls report on Friday sent bonds and mortgages soaring.  Fannie 3.5s are knocking on the door of 104-handle prices as originator selling has dropped below $1 billion per day – that will change quickly if these prices hold. 

Whether or not these prices hold, I think, will be the theme in this post-employment report week.  There is a ton of economic data on the calendar, including: Import, consumer, and producer prices, weekly claims, and the Fed Beige Book report.  10yr yields are at 2.03, ~25bps lower from last week.  We should see some obvious support at a 2% yield and trade between there and  2.13% until some of this data comes out to give the market more direction.  Right now Fannie 3.5s are up 4 on the day and stocks are down (DOW -130pts).