MBS's Reacting

• By the time this post hits, the prices will probably have gained some more.  Just so we're clear, the hi/lo/med forecast for this consumer confidence data had a low range of 71.

This is exactly the type of fallout We've been talking about with respect to Home Price Depreciation.  Throw in some high gas prices into the mix and look what happens.  The 64.5 number is quite quite low.  This strengthens my resolve that we will see a period of extremely low rates some time in the near (how near?) future.  We'll know more about the time frame as we get more data this week, but assuming there were to be no more data this week, we know we have to wait as long as it takes for these demolished consumers' trickle of non-participation to work it's way down to stocks.  Certainly they've been trickling already, but there is more trickle down to come.  In the absence of crushing MBS related news, this sets the stage for all time low mortgage rates, especially if the recent track record of "liquidity protection" by the Fed and others holds up.

Float today until further notice.  If you haven't seen further notice, in the absence of industry specific headline risk, keep an eye on stocks and bonds.  Also be on the lookout for lenders pricing "on the come."  If there is an obvious outlier, buying the market, it could be safe to lock if you are concerned about potentially positive durable goods orders tomorrow considering the stronger than expected Philly Fed Survey from last week.  The markets are looking for anything positive to latch onto as evidenced by the little run-up that yesterdays home sales data shows.  There is a complete lack of sobriety in the markets these days.  As such, you need to be ready to react with the speed and resolve of an insane asylum security guard, for in playing against the capricious markets, your job descriptions are similar, although your job hazards may be much more hazardous.

Float.  Proceed with caution.  Educate yourself.  And be ready to act.