Friday 10/10 ... Go Back To Bed (and Cover Up Your Head)

"and wait till a few weeks go by..."

Well, perhaps those weren't the exact lyrics form that childhood favorite, but the theme remains.

The Ninja reports from conversations with several traders that any levered MBS purchases would be a negative carry due to market turmoil. So the bid is out the window, cash is king, and no one has any cash. So it's down, down, down in price until SOMEONE, SOMEWHERE (please!?) figures out a way to buy SOMETHING.

Welcome to deleveraging folks. MBS are not the only horse in that race either. Yesterday saw money come out of almost all sectors, except things like gold. Without even checking, one might also assume that bomb shelters, big barrels of water, canned foods, and firearms had a bullish day as well, oh!, and also ad-hoc asteroid demolition teams led by Bruce Willis and Ben Affleck. (we're long on Armegeddon these days).

Forget 5.5's today, theyr's at 98-26 (not a typo).

Much closer to par are 6.0's, currently at 100-10+.

Do you have overnight price protection? Do you not have several weeks to "wait it out?" Taking a look locking this morning could prevent you from further gut-wrenching, but only if you have access to yesterday's rates still.

As far as "how long will this last?" You and and a couple hundred million other enquiring minds would like to know. The problem is that many of those enquiring minds are capital market operatives themselves. So unfortunately, who knows... Best bets right now are lenders such as TBW with overnight price protection, or playing a lock bias with lenders who have a good, fair renegotiation policy.