In a very interesting play the Asian market has been putting strong bids in on bonds in overnight trading since the news release that IMF Director Dominique Strauss-Kahn was jailed for sexual assault. This puts more doubt into any further Greek debt restructuring and we are now at the lowest levels for long term rates since late November 2010. We are on the verge of breaking through a critical hold point to see "potentially" further decrease to rates. The 10y is at 3.18 but if we break through our closely tested 3.14 we could see the yields drop to 3.00. The FNMA 4.0 closed on Friday at 100.125 and opened today relatively flat at -6bps and have gained back +3bps since opening bell.
Today does not have much for news, since the release of the Empire Manufacturing Index
Empire Manufacturing: Actual 11.9, prior 21.7 (consensus 18)
and I see another day of range bound trading.
I estimate the FNMA 4.0 coupon to range between 100.00 - 100.28
Lock Advice...
if closing in 7-10 days - LOCK
if closing in 14+ days - float cautiously
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