Mortgage backed securities (MBS) prices are higher (rates lower) as investors speculate whether Fed's policy makers will provide more guidance on purchase of Treasuries.

FOMC is examining whether to expand asset-purchase and lending programs or initiate fresh measures. The Fed is scheduled to issue its statement around 1115am pt tomorrow.

Housing starts unexpectedly increased in February to 583k, the jump was influenced by warmer weather and an 82% surge in condos, apartments & townhouses that's unlikely to be sustained.

Building permits, a leading indicator & a sign of future construction, rose less than starts, indicating construction may again slow.

Producer prices rose 0.1% in February as the cost of energy, cigarettes, light trucks and household appliances increased. Still the recession is forcing sellers of other goods to cut prices or hold them steady amid slow demand.

No more economic data will be released today, stock market is slightly positive, so watch the news headlines regarding Fed policy.

MBS prices have been range bound now for 3 months and are currently near the high of the range; watch for a pull-back from these levels without continued massive Fed purchases of MBS.