Concerns about Fannie Mae and Freddie Mac caused a mass panic in  the markets on Friday.  Mortgage backed securities, treasuries and stocks were all down appreciably.

Unfortunately for the "panic mentality," the market concerns were and are an obvious product of market lemmingism.  The hard numbers behind the two firms do not nearly warrant the level of panic we saw.

As such, we are seeing prices regain their losses after quite a bad Friday.  In addition, Hank Paulson announced on Friday that, if needed, Fannie and Freddie would be allowed access to the Fed's discount window.  The key phrase here is "if needed."  Fannie and Freddie have both maintained that they have plenty of capital to preclude a need to borrow from the discount window.

 Mortgage backed securities have already gained back almost half of their losses from the end of last week.

Rates won't be quite as good as they were on Friday morning, but we will be much closer than many thought.  Until we have further indication that Fannie and Freddie will drag on the market, it makes sense to float considering how overblown concerns have gotten.