With the exception of some minor range-bound choppiness, the general tone is supportive for MBS dollar price, however, compared to UST's, MBS look about as appetizing as 2 day-old, unrefridgerated, Moo Goo Gai Pan.

5.5's are currently up 8 ticks on the day at 100-06. But 10UST's up an impressive 34 ticks as the investors keep picking treasuries as the only horse in the race. That brings the yield to 3.635.

MBS's cousin, Swap Spreads are suffering a similar fate with 2y tenors out 163bps, and hovering around 70bps in 10 year space. We don't often talk "swaps," but it's germane to our struggle these days as it's further damning evidence that the world does not want risk, no matter how much the relative value increases.

Should you be concerned that we're widening or should you be happy? Tough to say, and with an abundance of uncertainty storing tsunami-like potential energy, ready to explode after the bailout vote, it really COULD go either way. What's more likely than not, however, would be some tightening for MBS assuming the legislation passes without incident (is that too much to ask this time?).

Be Ye Advised though, this will not be the massive "one fell swoop" tightening seen post-GSE bailout. Remember, that accounted for more than 20 years of pent up animosity and speculation that Frannie DID in fact have an explicit guarantee but finally came out of the closet nigh on 27 years later. It was more of a "all or nothing" implication, whereas the implications of this new bailout, in addition to being more difficult to predict, are also much more divergent than the eventualities pre-supposed post-Frannie.

Short Term? Long Term? Any Kind of Term-Term?

We always mitigate our risk assessment the longer you have to lock. Based simply on a probability standpoint, even the mid to mid-short termers are probably better served with a couple rounds in the float club. Plus, who can forget that Hope Floats, anyway? Believe in love ye devotees of MBS data. It seems that congress may "get it" to a greater degree. To whatever extent you ascribe to the notion that investors are not convinced until the bailout ink (isn't that pen getting a bit low?) is dry (and this is supported by the fact that the GSE bailout was much speculated to be priced into the market to a great extent, but the true tightener was the day of), you might also suppose that the "best" (we'd hate to think what "worst" looks like) is yet to come in terms of the bailout's effect on spreads.

Stay tuned. Today has been "quiet, almost too quiet." Seems that we're just asking to be surprised.