We're fond of reminding you that there are two ways to think of MBS: the way traders are primarily concerned with and the way loan officers are primarily concerned with.  This AM, we're strong in the former, but weak in the latter.  Traders would consider MBS to be performing well this AM as we are tighter to the yield curve, meaning the price levels of MBS are better compared to treasuries.  However, treasuries are down this AM, which has hurt our price to a slightly lesser extent.

4.0's are down 8 ticks to 100-16   (ginnies up 2 ticks to 101-02)

4.5's are down 6 ticks to 102-00   (ginnies down 3 ticks to 102-28)

5.0's are down 1 tick to 103-00     (ginnies up 1 tick to 103-29)

5.0's are down 1 tick to 103-13     (ginnies unchanges at 104-02)

In 15 yr coupons

4.0 down 5 ticks to 101-27

4.5 down 2 ticks to 102-30

5.0 down 2 ticks to 103-13

5.5 down 3 ticks to 103-26

Today is the last day of 48 hour Class A Settlement, and January Coupons are no longer open for trade although the settlement process for them continues today.  The net effect of the role from a price perspective will not be known until tomorrow.  Even then, we expect a lot of "trickle" as originator volume will be able to pick back up as funding lines become replenished.

Last week was the inception of the Fed's buying program and held significant benefit for MBS prices and spreads.  Unfortunately due to the reasons discussed here, we have seen a disconnect between MBS prices and some lenders rate sheets.  Hopefully now, because of the funding consideration being somewhat ameliorated by the settlement, we can slowly but surely tighten those spreads between primary and secondary rates.

There is nothing on the calendar by way of scheduled data today, so we're looking for prices to be influenced to some extent by stocks, tsy's, but mostly by "flow" considerations.  Almost all the January paper is netted out and currently being settled.  As this occurs, it's a matter of time before any money freed up from this settlement makes its way back into the market.  With no data, we are in a "wait and see mode."  And perhaps more confounding than anything is that lender's massive spreads have much more potential impact on MBS yet again this week.  So we'll be keeping our analysis model nimble and update you on what we're hearing from our lenders as this situation evolves. But of course, if MBS moves significantly, we'll be the first to let you know.