• Today is much flatter compared to yesterday
  • But 4.5's are still up 5 ticks and we're at highs again near end of day
  • 10yr tsy lower by around 1 bp to 3.64
  • No data on Friday, but tons to consider tomorrow
  • Waiting for reprices for the better, then consider locking

First thing's first.  It's another "up" day:

Also, we've seen some correction to recent widening trends in MBS.  Whether this should be reassuring or cause us to worry about spreads widening back out again is and will be uncertain, but at least we know it's uncertain. 

Here's what's going through my mind right now:

1. It's uncommon for  rallies to string together more than a 4 or 5 day streak.  Today marks the 4th day in a very stable and directional trend of improvement in MBS.  Don't take my word for it though....

2. Adding complexity to that generality though, is that stocks have also strung together a long-standing day over day rally, and it's not likely that both stocks and bonds will lose out on the same day (though it happens plenty, just not as likely).  So I might consider which market I think is more likely to turn around

3. For reasons we'll probably discuss in the last post of the day, MBS are more likely to turn around than stocks. 

4. That makes tonight the best night so far this week to consider locking, ASSUMING you have seen or will see a decent reprice for the better before cut-off.  No reprice, no change in opinion.

5. Tomorrow is not only data heavy, but also FED SPEAK heavy, and includes fresh treasury supply which is more often than not, suggestive of weakness in bonds.  However, this has been LESS true of late than it was in 2009. 

6. Bottom lines: the KNOWN factors this evening would push my bias toward locking to a greater extent than previous days this week, but that's not necessarily an out and out lock bias on everything.  It is, however, an earnest request to evaluate profits tonight and take profits where available.  Additionally, the UNKNOWN factors are just that, and consist of the raft of info coming our way tomorrow.  If you have any ardently held opinion on tomorrow's calendar, that might sway you in one direction or the other, but even if tomorrow's calendar suggests floating to you, that would only be enough to justify an indifferent lock bias.  Any other conclusions would only make me more defensive. 

So be defensive, but preferably on deals where profits exist today vs. when you originated them, and preferably not to the extent that you lock for the sake of locking without considering how many gains have been passed on and finally, sprinkling in your own assumptions about tomorrow's data.