As discussed yesterday, each time the price curve on the 5.5% coupon approaches 101-00, we begin to encounter resistance, and it will likely take an incontrovertibly grim economic outlook to create sufficient demand to push us higher.  A 200 point drop in the Dow would be enough, but only if the index itself were much closer to 12000 than 13000.  This would have to coincide with a lack of negative mortgage related headlines.

We had hoped to float until the Fed Minutes today, but the MBS market appears to be getting a little too much resistance.  So be advised some lenders may reprice for the worse if they already have rates out.  We're down 7/32nds on the day so far on the 5.5% coupon.

Lots of potential volatility remains for the day as we have limited data and the Fed Minutes in a few hours.  Look for a more detailed analysis of the action following that.  Until then, safest bet is to lock considering recent declines combined with the historically high MBS prices, but we may see more improvement for you risk-takers after the minutes are released.