as treasuries have held fairly steady, MBS have drifted a bit wider, now down 7 ticks to 99-29.

Stock rally is certainly exerting some pressure here as it almost feels as if the markets are already convinced of the verbiage of the fed statement saying something like:

• risks to growth subsiding
• inflation still a concern, but not as much as maintaining growth and skirting recession
• allusion to more bank failures and mortgage problems

So you may see a reprice for the worse from a lender that didn't hedge for this possibility this morning.

The initial reaction to the statement will be a very volatile up and down for MBS.  Likely, it will look like the sky is falling, but a reversal could occur later in the day.  So how long can you hold your hand over the flame without flinching?  Just depends on how much you care about getting burned.  Until I hear the Fed statement I can't agree that the sky is falling, but if the stock market's premature bet on the FOMC statement is accurate, our sky may indeed come closer to the ground than we've seen in a while.

But then it's only a matter of weeks, not months, until MBS are right back in the game.  This can all change with the statement, but the bottom line is that if you have a sensitively priced deal and did not heed the warning from last week about only floating if you have some time to wait, you might save yourself an eighth by locking now.  Just don't be heartbroken when the bounce back occurs some time in August.