This is one of those situations where we're not much bothered by the downtick in MBS from an analytical point of view, but that doesn't mean that lenders might not consider a reprice for the worse with prices near their lowest levels of the day. Fannie 3.5's are currently 1 tick down at 100-31. And although it's unlikely that many lenders would recall, and although it's of little consequence to the bigger picture, it's an outside possibility.

After bouncing near the 101-00 support level, Fannie 3.5's are back in the green. Trading is active this morning, and we're anywhere from 3 to 5 ticks improved in recent minutes, making for prices of 101-02 to 101-04.

Treasuries got a supportive bounce as well before heading over the 2.23 level and are currently at 2.21. That's a net loss on the day for TSYs versus a net gain for MBS. We're hearing the outperformance is indeed due to the circulating prospects that the Fed could re-enter an MBS buying program using something other than MBS prepayments and monthly paydowns. MBS weren't such a bad deal in the first place, but the speculation makes them golden, at least for today.

Bottom line on the price action at the moment is that reprices for the worse are likely no longer a risk, and it wouldn't take much more of this trend continuing for lenders to start thinking about reprices for the better. But we're not there yet.