Today’s Market Commentary

MBS has opened slightly better. Expect mortgage pricing to be near or a little better than yesterday when rates are current.

Marking time ahead of tomorrow's FOMC announcement and this week's Treasury auctions, bond prices rose and stocks fell on Monday. As mentioned previously, while this week's auctions, beginning with today's three-year note auction, are large, there are significant cash flows from maturities and coupon payments. There were no economic releases on Monday and no major ones before tomorrow's FOMC announcement. The Fed's two-day meeting begins today and is likely to focus on the recovery's sustainability, the open market securities purchase programs, and the exit strategies. Among the minor data releases, this morning's report of second quarter unit labor costs and productivity showed the continued cost cutting among US companies. Productivity hit 6.4% in the quarter and unit labor costs plunged. This morning's Wall Street Journal includes an op-ed piece on Ginnie Mae and FHA entitled "The Next Fannie Mae." The full-faith and credit FHA now insures $560 billion, according to the article, quadruple the 2006 amount.