MBS RECAP: 1/5/2012

The overall range remains tight and MBS remain capped by resistance (for now) at 102-30, but things have had a noticeably bullish overtone since the last alert and we wouldn't be surprised to see an early-to-act lender or two reprice for the better, but neither would we be surprised if absolutely no one repriced at all. Bottom line is that negative reprice risk is gone at this point (at least as far as MBS-driven risk).

Whether or not a "negative shift" in reprice risk constitutes potential reprices for the worse is questionable. After all, MBS are still +1 on the day at 102-26 with high-side resistance at 102-30. So although we're not especially concerned about reprices for the worse, the positivity mentioned in the previous alert does need to be unwound, taking us at least back to neutral territory. In general, reprices remain unlikely. We'd be a bit more concerned if MBS fell through 102-25 and most concerned about a break below 102-22.