The MBS stack continues to trade in an isolated marketplace while the world digests a deluge of headline news and formulates new trading strategies. MBS outperforms TSYs (yield spreads are tighter). Production coupons continue to trade in a choppy range while "up in coupon" positions are being churned for profits. Some investors have repriced for the worse. For more on MBS behavior today read MBS LUNCH

FN30_______________________________

FN 4.0 -------->>>> -0-09 to 100-07 from 100-16

FN 4.5 -------->>>> -0-06 to 101-30  from 102-04

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

FN 5.5 -------->>>> -0-01 to 103-25 from 103-26

FN 6.0 -------->>>> +0-00 to 104-15 from 104-15

GN30______________________________

GN 4.0 -------->>>> -0-07 to 100-14  from 100-21

GN 4.5 -------->>>> -0-06 to 102-02 from 102-08

GN 5.0 -------->>>> -0-04 to 103-17  from 103-21

GN 5.5 -------->>>> -0-01 to 104-03 from 104-04

GN 6.0 -------->>>> +0-00 to 104-18 from 104-18

Stock  markets continued to rally during the 60 minutes President Obama spent answering questions from media correspondents following the conclusion of the G20 Summit. I usually dont make any political inferences but I must say his interactions with foreign leaders and the international media has shined a positive light on America as a whole. Anyway here are some important notes from the G20 Communique.

"We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system."

"Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance."

"We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires."

"We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy."

These statements combined with relaxations of mark to market accounting policies have provided enough excitement for markets to start BELIEVING that the light at the end of the tunnel is not a train heading in our direction. The stress on TOGETHERNESS is of great comfort to those expressing concerns that global investors would eventually lose confidence in America's global financial leadership. BELIEVING in a plan is step 1 in ending protectionism...

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