Mortgage rates trends and information for February 18, 2011. (Ginnie and Fannie)

Good Morning...
 
On Thursday, current coupon mortgages finished little changed versus swaps while both higher and lower coupon mortgages outperformed.  At the close, FNCL (30yr) 4.5s in March were +8/32 (101-03) and the FNCI (15yr) 4.0s in March were +7/32 (102-02+).  In agency swaps, Ginnie/Fannie swaps continued their move higher yesterday in response to the same dynamics that have been in play all week (limited supply and the prospect of slower prepay speeds going forward).  Right now, the Ginnie/Fannie 5.0% swap is trading +44/32nds up 6/32nds from a week ago.
 
Flows from originators totaled about $1.25bln yesterday, which is in line with the daily average for the week.  In many instances, lender's hedging needs have been fairly minimal this week as the rate of new locks coming in the door has almost matched the pace of pipeline fallout.  With the rally over the past two sessions originators have been able to reprice their 30yr primary rates lower by .125% to ~5.125%.  The recent move puts the primary/secondary spread at around ~80bps which is virtually unchanged week over week.  Lock activity has been categorized as flat to slightly higher week over week, but overall production remains extremely muted. 
 
Yesterday, treasuries finished the session higher across the curve amidst continued unrest in the Middle East and the release of some weaker than expected economic data.  At the close, the 2yr was +4.25/32 (0.766) and the 10yr was +12.5/32 (3.576).  In economic releases yesterday, the weekly jobless claims figure was released and showed an increase of 25k week over week.  The larger than expected increase is further evidence of the sluggish pace of improvement in the labor markets.  The CPI index for January was also released on Thursday and showed a 0.4% monthly increase in the index versus expectations for a 0.3% increase.  The largest monthly increase in food costs in over two years helped contribute to the increase in the index.  In equities, futures are little changed following modest gains in all of the major indices yesterday.  Right now, S&P futures are -0.3 and Dow futures are +1.0