Around a month ago, we identified that familiar internal horizontal trendline which we said would serve as a strong floor of support in April.  It has....

We also said that when it was violated, there would be a good chance of it signifying more losses ahead for MBS.  Today may be the day we see it close below this line.  From an intraday perspective, we have dipped below the line several times, but never CLOSED below it.  So between now and close, there is still hope, if we hold current levels or better, that we will stay on top. 

Here are prices so far today.

Since 5pm "Going Out" levels....

FN30________________________________

FN 4.0 -------->>>> -0-13  to  99-19  from 100-00

FN 4.5 -------->>>> -0-09  to 101-15  from 101-24

FN 5.0 -------->>>> -0-08  to 102-18  from 102-26

FN 5.5 -------->>>> -0-04  to 103-13  from 103-17

FN 6.0 -------->>>> -0-03  to 104-14  from 104-17

GN30________________________________ 

GN 4.0 -------->>>> -0-12  to 99-24    from 100-04

GN 4.5 -------->>>> -0-10  to 101-22  from 102-00

GN 5.0 -------->>>> -0-10  to 103-04  from 103-14

GN 5.5 -------->>>> -0-04  to 103-22  from 103-26

GN 6.0 -------->>>> -0-02  to 104-08  from 104-10

UST10YR: 3.19%

2s/10s: 226.26 bps

DOW: -1.75 to 8166

MBS Current Coupon: 4.10%

Current Coupon/10 yr Treasury Spread: 91bps

And here has been the effect on the long term Day Over Day Chart:

This comes at a perplexing time as AQ already mentioned...early in the month is a traditionally supportive week for MBS, but then again the MBS stack is battling the steepening yield curve (and the threat of further steepening ahead of more supply being auctioned) .  So we risk getting potentially conflicting information from technical signals versus fundamental data. 

Either way, additional reprices for the worse are a strong possibility today.