Late sunday night, a plan was announced to bailout Citigroup after the troubled firm began to show the same symptoms "death by Monday" that Lehman and Merrill.

Aside from the $20 bln of direct capital injection (on top of $25 bln that came in the past), the most salient point is the return of the backstop.  Here's a snippet from WSJ:

"Under the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billionin losses in that portfolio. After that, three government agencies -- the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. -- will take on any additional losses, though Citigroup could have to share a small portion of additional losses." -WSJ

A great place to stay tuned to the broader bond market's reaction is www.acrossthecurve.com.  I know John Jansen personally, but I'd encourage you to check out his site even if I didn't.

But what about the MBS market specifically?  Remember Lehmerrill weekend?  I know you were all probably as happy as anyone to have have the major price improvements in MBS after the Frannie bailout price positivity faded.  But the spread man!  Think of the spread!  We got KILLED when Lehman was "allowed to fail."  So is this then, the opposite of that?  I guess we get to find out in short order.  My guess is a not-insignificant amount of tightening, but as to whether that tightening was already priced in on Friday night's rally, or if MBS traders were waiting for the ink to dry last night is, well, anyone's guess.  We'll be back in about an hour with opening price levels.