Ok, so it's never a good time to ignore the MBS market, but the real question wouldn't fit into the title.  Even then, it's a rhetorical question anyway, the purpose of which, to suggest that we merely ignore past ranges of MBS as indicative of how high or low they are in the current range.

I'm not sure if that's entirely clear, but I'll keep trying...  MBS closed up at ticks at 100-31.  That's far enough away from the highest prices so far this year to hope for just a bit more upside if you thought the current rally might continue.  And of course, there's always a chance for upside or downside.  But if you were to be informing your opinion in some way with the thought that MBS are not near the top of their range and thus have "room to run," it is indeed time to ignore MBS.

Considering the constantly moving target that has been MBS spread in a nearly straight line tighter throughout 2009, and considering we are even tighter now, and considering Fed MBS exit is coming (maybe), it's been a constant theme for the past few days to call attention to these factors as they suggest a much much tougher time going any tighter compared to the relatively easy drift wider.  And that's exactly what they've done. 

So it makes sense then to turn to the benchmark exclusively for our assumptions about where in the range we are.  (of course we always lean primarily on benchmarks for notions about technicals and ranges, but even more right now).  And at 3.62, the 10yr yield is a lot lower versus it's 2010 range than MBS is high at 100-31.  Translation: MBS might indicate some meaningful room to run, tsy's much more limited. 

I say "limited" because it's entirely possible to dip into the 3.5's again as we already have this year, but that amounted to more of an exploratory TEST of that old 2009 range, and that test failed.  But even that may prove too heady a goal if GDP is bullish tomorrow AM.  It certainly looked too bullish today considering that 3.62 looked downright impenetrable on the intraday:

Also note that I changed the "triangle" in MBS to a "channel."  Either formation could be applied, but after looking at the chart some more, I was troubled that I couldn't connect the pre and post auction lows with the triangle line.  In drawing it backwards towards the open, it conveniently connects with another temporary low (though not an absolute low).  But since prices had bounced there on a smaller scale, it counts as something, thus making a slightly stronger case for the channel.  Does any of this matter?  No, not really...  Just wanted to justify the change and give a hat tip to Kent Mikkola who chatted me the same conclusion. But do remember that the significance of such lines is to effectively set "trip wires" that, once crosses, will alert us to potential changes away from the current trend.

That'll do it for the more technical movements today, here's the Ninja with a much more detailed look at how some of the GSE buyout rumors I mentioned last night have played out today:

Mortgages saw more pain in those secondary trading coupons that FNMA has deemed even too delinquent for their tastes and sensibilities, never mind the bond-investing public. Speaking of which, they levied such a punishment upon holders of said "Credit-impaired" coupons today (6%s thru 7%s) that maybe they will one day soon return to the lower stack and start whittling down "current coupon" rates-and thereby reduce primary rates as well. Sound like a good idea? Well, the Fed thinks so as well, and has all along (back to last January) as today"s Fed Agency MBS recap showed more purchases along 4.5%s (the current and reigning production coupon in secondary trading) as nearly ¾ of the Fed"s weekly $11 billion were spent buying 4.5%s and trying to forever stabilize mortgage rates (FHLMC was over 5% in its weekly lending survey-anyone notice?).  Away from all this the market has to figure out a way to gradually test a higher and wider range (Sorry brokers of lower mortgage rates) as the Fed starts to spend less in the remaining weeks of its purchase program (about $2 billion per day). Popular thought, and we all like to be popular, has the market back out to the early daze of the MBS PP (purchase program) where the constant battle with +100/10yr notes took a few months to overcome. Maybe the reverse is true as well and the widener back out 40bps will be just as slow. Keep alert.

And to keep on that very pertinent topic, everything you needed to know about this week's Fed MBS buying as well as considerations about what it means for the futures.  RIGHT HERE.

Don't forgot tomorrow's a busier than normal Friday with the always unpredictable GDP, as well as Consumer Sentiment, Chicago PMI, Existing Home Sales, and 2 Fed Speakers.  Could be entertaining... See you tomorrow.