Ben Bernanke lives in a three-bedroom, 2,100-square-foot, attached town house near the Capitol. It has an appraised value of roughly $850,000, not far from the $839,000 he paid for it in 2004. A public record search shows he owes $672,000 on the home, after refinancing his mortgage twice.

One refinancing was in late 2009. The other was in late September, shortly after the Fed announced a new program, known as "Operation Twist," which aimed to drive down long-term interest rates.

After a decade in Washington, Mr. Bernanke doesn't seem to have been swept up by the nation's capital.

He doesn't read books about the financial crisis. When asked in September if he had seen a recent HBO movie about it, he said he hadn't: "I saw the original."

Everyone's a buyer today, and the Fed is taking a good deal of the existing supply in 2 operations (one that passed at 11am and another coming up at 2pm), simply solidifying the omnipresent buy-side.

MBS are merely along for the ride, at least as well as they can be (or as well as they are willing to be) given the even thinner trading conditions in the MBS market. Gains have been slow going compared to Treasuries and reprices merely trickling in so far. Not what you'd expect at these price levels, but expect lenders to be increasingly resistant to pricing in MBS gains when rate sheets are already at record rebate levels for "high 3's" Best-Ex rates.

By way of a parting thought, yesterday we said the following with respect to 10's possibly getting into the 1.8's, "Although we're concerned with the question of "where do we go from here if not back higher in yield?" things are good for now."

As it turns out, it looks like the answer to that question is "they go a bit lower." This is a classic example of markets taking the prevailing "common-sense" and turning it on its head. We thank the markets for reminding us that they tend to act in such a manner as to prove the greatest number of people wrong. This is just something to keep in mind if you find yourself thinking along the lines of the following mad lib:

"surely, go any from "

If it seems that obvious, there's a good enough chance the opposite will happen that you might want to at least be prepared for the possibility.

(excerpt from latest MBS Commentary)

The long end of the yield curve rallied into the Fed's POMO (permanent open market operation), which this morning, is an outright purchase in 25-30yr space. Of the $4.56 bln offered, the Fed took $2.51 bln, good enough to give prices another jolt higher in Treasuries, bringing 10yr yields down into the 1.85's.

MBS have followed suit, experiencing a similar jolt. Fannie 3.5's shot up about 5 ticks from 102-16 to 102-21. The 2-3 "early to act" lenders might have their fingers close to the reprice button on these moves, but liquidity and volume remain quite light in MBS land, so most lenders would want to see gains stick around for a bit longer or extend further before repricing.