MBS has consolidated its gains and recovered from intraday lows. At these price levels one would expect originators to be making some delivery commitments (lock in loans), however month end/quarter end balance sheet positioning and the generally apathy that surrounds mortgage ops centers at month end is putting a hamper on any above average activity (primary and secondary markets). If originators attempt to dump off any supply of production coupons (the loans you close) the market will gladly take the opportunity to let excess supply assist in the process of lowering the high dollar prices of MBS coupons. Translation: high prices put us on reprice alert watch.

Change Since 3pm Closing Marks...

FN30_______________________________

FN 4.0 -------->>>> +0-00 to 100-17 from 100-17

FN 4.5 -------->>>> +0-00 to 102-03  from 102-03

FN 5.0 -------->>>> +0-02 to 103-05 from 103-03

FN 5.5 -------->>>> +0-03 to 103-25 from 103-22

FN 6.0 -------->>>> +0-00 to 104-13 from 104-13

GN30______________________________

GN 4.0 -------->>>> +0-03 to 100-20  from 100-17

GN 4.5 -------->>>> +0-02 to 102-07 from 102-05

GN 5.0 -------->>>> +0-01 to 103-20 from 103-19

GN 5.5 -------->>>> +0-02 to 104-01 from 103-31

GN 6.0 -------->>>> +0-01 to 104-14 from 104-13

Yesterday's FN 4.5 intraday high will still serve as our short term overhead resistance level...looking longer term the next level of resistance is the March,18 2009 high of 102-16. Reaching that price point will most likely be a choppy process... if we can break through short term resistance at 102-07. This has been a tough task for MBS today and we would consider this a strong resistance point for the FN4.5.