Mortgage backed securities (MBS) prices are lower (rates higher) as the Treasury prepares an auction of $18 billion of 10yr notes and global stocks advanced.

Monthly rollover took place overnight, switching the current coupon from April to May. May MBS prices reflect a drop of about 31bps from April. The change is priced in over the course of the month so the impact on mortgage rates on the day of the rollover is generally no greater than on any other day of the month.

U.S. stocks surged after Wells said 1st quarter earnings will be better than expected. Jobless claims fell 20K to 654K, but benefit rolls rose to a record 5.84 million, indicating little let up in labor force contraction.

U.S. trade deficit unexpectedly narrowed 5.1%,the lowest level in 9 years as demand for Asian cars, toys and electronics collasped and exports climbed from a 2yr low as sales of pharmaceutical supplies, autos and telecommunications equipment improved. The report emphasizes how much consumers and businesses have pulled back on spending. Import prices rose 0.5% in March due to price of petroleum products jumping 10.5%; ex-oil prices fell 0.7%. Export prices are also showing contraction, down 0.6%. MBS markets will close early today at 11am pt and will be closed tomorrow for Good Friday. Happy Easter and Passover!