The Bridgewaters, Massachusetts

Mortgage Backed Securities (MBSs) continue their volatile trading today after being up 11/32 at the opening bell. After the release of several economic reports, the  FNMA 30-Year 4.5% coupon was up only 2/32. Treasuries are up substantially while stocks are down on concerns that the recession is deepening & the government will require banks to comply with stricter bailout conditions.

MBS traders will focus on the employment numbers on Friday. They are looking for evidence the recession is deepening while at the same time digest the expected record amount of debt needed to finance the myriad of anticipated government spending. On Wednesday, we get the Challenger & ADP job reports. This will provide a glimpse at the employment and layoff situation. The jobless claims report comes out on Thursday, while the Employment report for January comes out on Friday.