3/18/10

Most rate prices are slightly worse as mortgage bonds are unable to hold onto yesterday’s grind higher. Minimal selling, a flatter yield curve and lower volatility is helping MBS perform well this week despite the impending Fed exit and repeated days of stock market gains. Another bit of bond friendly data was released today with an unchanged consumer price index reading suggesting inflation is well contained. Still ugly initial jobless claims and a wider account deficit were reported as well. Leading economic indicators came in as expected and the Philly Fed survey suggested improved manufacturing conditions and employment despite the weather issues. Following this release we are seeing some pressure on bonds as Treasuries are showing weakness, taking some wind out of mortgages sending them into negative territory. Today we find much Fed speak defending their role in regulating financial institutions against proposed legislation that would limit their domain to only the larger banks. Meanwhile, the Fed has a mere 9 business days left as the backstop bid for MBS…