Last week had a heavy data calendar, along with some earnings news from key MBS players. Data in the first half of the week generally came in worse than expected. For example, the PPI numbers were much stronger than expected at 1.1% versus a consensus call for 0.5%, and year-over-year was at 6.9%, up from 6.4% in February. Bear Stearns' economists noted that inflation was everywhere in the report. The Federal Reserve's Beige Book also reported widespread pricing pressures for food, fuel and energy, and many raw materials. In addition, it cited some wage pressures showing. The combination has lowered the odds of a 50-basis-point cut in the Fed Funds rate at the end of the month to 25 basis points currently.

March housing starts fell a larger-than-expected 11.9% to 947,000, their lowest level in 17 years. Meanwhile, February starts were revised higher to 1,075,000 from 1,065,000. Analysts had predicted a decline to 1,018,000. Building permits also fell a more-than-expected 5.8% to 927,000 versus a median estimate of 965,000. The news does not help the outlook for GDP for the second quarter.

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