Despite Stocks having fuel added to their fire in the form of falling oil prices (down to 114/brl now and Dow over 300 still), MBS are telling the "winded hare" (UST's) that slow and steady wins the race.

there is a nice small gradual upward trend starting at 1:30PM EST and continuing presently.

6.0's are up 10 ticks on the day at 100-06.  Spreads are tightening faster than our high school prom-wear as the years go by.

Floaters keep floating.  Lockers wait wait wait for the cutoff to allow lenders to bake in as much of their gains as they will for the day (which needs to happen within a few hours if it's going to happen).

Looks like a little thing like 2.5x worse than expected earnings for fannie can't keep us down.  I guess just not enough to catch up to all the negativity that had been price into the MBS curve.  Plus a lot of "awakening" has been happening as traders realize that "hey, maybe at this nearly all time high historical spread, this might not be such a bad thing to buy!"

Even so, after talking to a few friends "on the street" today, they are hearing from traders that even they are surprised by other traders bullishness on MBS today and it appears to just be the 8/8/08 anomaly.  Whatever it is, we'll take it!  

(watch out for some late day profit-taking if we hit 100-10...  but nothing that will cause a reprice for the worse considering the rest of the day and that 3pm just hit--meaning the liquidity valve is off for the day...  In other words, you're in the clear.  enjoy your weekend)