In this market, it's a almost a reliable bet that whatever happened yesterday, the opposite will happen today.  Unfortunately the simple fact that mortgage pricing should be slightly improved this morning doesn't tell the whole story.

MBS (mortgage backed securities) are basically bonds, when price goes up, rates go down.  Like most bonds, they are compared against a risk-free benchmark which is usually a US Treasury.  Even more important than the actual price of the MBS sometimes referred to as "dollar price," is the "spread" between MBS dollar price and treasury dollar price.  Spread speaks to the quality perception of the MBS.  The less the demand for an MBS, the cheaper and cheaper they get, which increases the yield and also the spread, as long as the yield is increasing at a faster rate than treasuries.

This is precisely what is occurring today.  Overnight, we had more sour news from firms with mortgage holdings.  The Fannie Freddie buzz remains negative, UBS had a huge writedown, big writedown at Chase, as well as generally bad news from Morgan Stanley and Wachovia.  Nonetheless, owing to a lagging stock market, we are improving strongly enough in treasuries that MBS are staying positive despite the wider spreads.

 If you have time to wait for the convulsions of this uncertain market to play out to a greater extent, floating makes more and more sense the longer you can wait.  In the shortest of runs, there are no guarantees.  Either price levels like yesterday are yet another "visit" to the lowest general levels of the year, or they are a stopping point on the way down to new lows.  The closer we get to the end of August the less likely "new lows" become.