NO REPRICE FOR WORSE

Immediately following the Treasury's auction of $14bn in 30 yr bonds, MBS prices fell as the demand for long term debt was apathetic. (2.02btc. 34% overseas participation)

The Yield curve is flattening out again and the spread on the FN 5.0 is now tightening. This morning it was as much as 3 ticks wider vs. the 5 year Treasury. That is a good thing for the time being...we are keeping pace and gaining on Treasuries!!!

If no reprice received...rates are stable for now.

1:20 Marks...

FN30__________________________________                                  

FN 4.5 -------->>>> -0-03 to 101-01 from 101-04                                        

FN 5.0 -------->>>> +0-00 to 102-03 from 102-03                                    

FN 5.5 -------->>>> +0-01 to 102-19 from 102-18    

FN 6.0 -------->>>> +0-02 to 103-11 from 103-09                                        

GN30__________________________________

GN 4.5 -------->>>> -0-04 to 101-16 from 101-20

GN 5.0 -------->>>> +0-00 to 102-20 from 102-20

GN 5.5 -------->>>> +0-02 to 103-00 from 102-30

GN 6.0 -------->>>> +0-02 to  103-17 from 103-15