By close today, FN 4.5's had lost a mere tick to end at 100-24.  5's were the strongest, finishing unchanged, while everything farther away from "the belly" got progressively worse with premiums (6.0's and up) getting hit the hardest.  Chalk the uncharacteristic MBS Belly Buying up to The Ninja's snippet in last night's close, or rather, chalk it up to that which he already chalked it!

"Actually, in times of great moves the upper and lower wings (super-premium and lower coupons) were ignored in favor of the safety of the "belly" or middle area coupons along the 30yr universe (5%s and 5.5%s). This serves to lessen exposure (duration) and still adheres to some semblance of order as longer vehicles (lower coupons) are still needed to take advantage of a rampaging 10yr treasury note."

As it was yesterday, so shall it have been today with the belly getting the bid, and wings (particularly premiums) getting the shaft.  The talk of the MBS town was the Fannie/Freddie buyouts of 120+ delinquent loans--more so Fannie, as the rumor mill churns out speculation as to how they will implement their plan with respect to the coupon levels.  Uncertainty about what's happening where and how and with whom, etc... combined with a rapidly approaching March 31st Fed D Day, simply reiterate Ninja's point about "safety of the belly" from yesterday. 

From a technical standpoint, support stuck around in MBS, and the internal trendline providing resistance for treasuries at 3.68+ continued to do exactly that.  Plain and simple: 10yr yields were UNDER that level part of the say and even "bounced" off of it as support a few times, but upon breaking to the upside, yields then bounced off the same level, only this time in the form of resistance, thus putting a lid on any further gains for the benchmark.  Charts:

More Bernanke testimony, 2 other fed speakers, claims, durables, 7yr auction, and the kitchen sink all make for a potentially action packed Thursday, but unless bombs are dropped, either in the form of tape-bomb variance in econ data, or B-Bombs in the form of something Bernanke might say that ruffles feathers, there's STILL GDP on Friday, not to mention 2 more fed speakers, existing homes, consumer sentiment, and Chicago PMI.  Yowzah!!!

(oh and that "yowzah" means overnight floats are riskier than normal amidst heavy data, but considerations could be balanced against historically decent responses to the ends of auction cycles, as well as the soothing tones of Uncle Ben, all qualified by asking the question, "does any of that even matter if there is a Top Gun chart on the last post?"  Well yeah, it probably does, but just barely!)