Today has been overwhelmingly slow and uneventful for MBS and Treasury markets alike. Volume is lower than every day last week with the exception, perhaps, that we could reach Monday's totals in terms of 10yr futures by the end of the day. Considering that we're, in a sense, making up for a lost day yesterday, that's quite low. The only moderately interesting thing to have happened in Treasuries all day has been the early bounce of 1.90+, which was in line with Friday morning's high yields. Since then, 10's quickly returned to trade firmly inside Friday's range, though have been favoring the more bullish end between 1.87-ish and 1.85. Narrow, boring range... MBS similarly bounced at their same levels as Friday morning and similarly returned to trade firmly inside Friday's range. Current levels are only a few ticks off all time highs and given the extreme NARROWNESS of the trading range combined with the fact that we'd discount the euphoric rally that followed the September 21st MBS announcement, it's just as well to say MBS are sideways at all time highs. For what it's worth, we'd continue to keep an eye on the eerily steady uptrend that supportively underlies almost all price action since October with the inclination to get more defensive when it breaks by more than a few ticks for more than a day or two. (chart of this in the following link:)

"The FDIC today approved a notice of proposed rulemaking (NPR) that would require certain large insured depository institutions to conduct annual capital-adequacy stress tests. The proposal, to implement section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, would apply to FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion. The FDIC regulated 23 state non-member banks with total assets of more than $10 billion as of Sept. 30, 2011.

The stress tests would provide forward-looking information that would assist the FDIC in assessing the capital adequacy of the banks covered by the rule. The banks that would be required to conduct the stress tests also are expected to benefit from improved internal assessments of capital adequacy and overall capital planning..."