First and foremost. We are rallying ahead of Tim Geithner's 11am speech...but are off intraday highs.

1030 Marks...since 5pm

FN30_________________________                GN30______________________

FN 4.5 -------->>>> +0-00 to 101-00                      GN 4.5 -------->>>> +0-01 to  101-07

FN 5.0 -------->>>> +0-05  to  102-03                    GN 5.0 -------->>>> +0-04 to  102-10

FN 5.5 -------->>>> +0-03 to  102-17                     GN 5.5 -------->>>> +0-03 to  102-23

FN 6.0 -------->>>> +0-00  to  103-07                    GN 6.0 -------->>>> +0-00  to  103-04

And second.... lenders have passed along some gains to you this morning. I recommend having your finger on the SUBMIT LOCK button though

There is a good amount of headline news to take in today so strap in and "get your popcorn ready"....

What to expect

Relief for home owners.  Whether it be via government loan modifications through Fannie and Freddie or incentives for mortgage companies to modify loans the Treasury/Fed will be looking to support home ownership. Housing got us into this mess...it will lead us out too. (Cram downs shouldn't have much effect on current TBA MBS market)

Expansion of Federal Reserve Balance Sheet. Expect the Federal Reserve's  balance sheet to take on more assets via an expansion of the Term Asset Lending Facility (WHAT IS TALF). The TALF, which already includes ABS like auto loans, consumer loans, and student loans, should be expanded to include CMBS (commercial real estate loans).

The Bad Bank. This is going to involve the "spreading around" of all the "toxic assets" and some sort of debt guarantee. Banks won't be lending until "toxic assets" are removed from their balance sheets. So the US Government is going to have to guarantee private equity purchases of "toxic assets". The removal of these non-marketable securities is the most important building block of a recovery. I am sure the funds to purchase the bad debt will come from TARP (which will be renamed). Which brings us to...

Capital Injections. Any financial institution that regulators feel is in need of capital injections....will get capital injections. But the terms in which the Treasury will provide relief will be stern, meaning the funds MUST BE used how the Treasury wants them to be used...ie LEND MONEY!!! (if they are able to meet capital requirements). This would imply lower mortgage rates....but the terms of the capital injections wont be easy. If you want those "toxic asset" guarantees and some TARP money....the Treasury will most likely require a certain amount of money creation on your part.

Plain and Simple: Consumers and small businesses need credit....or else. In order accomplish that banks are going to get told what to do! If they don't comply...they will be left to fend for themselves.

Today is Class A MBS settlement day...all is quiet in roll market. Ninja says buy FN 5.5s.

Today is Class A settlement. We start watching March coupons Friday morning

3yr Treasury note auction at 1pm...$32bn worth

Bernanke at 1pm as well....

LOTS ON THE TO DO LIST FOR ME TODAY!!!

It feels like change is in the air for us...