MBS RECAP: Coasting Out Near Best Levels Since November

Fannie 4.0s are up 5 ticks at 104-28.  That's 9 ticks lower than the early February highs, but keep in mind those highs came just before the roll, which was about 10 ticks.  So in a magical world where there's no monthly MBS settlement, we would be closer to 2-3 ticks off those highs (as opposed to 9). 

The past 5 sessions have all been positive for MBS, though yesterday and today are the ones that have really broken out of the recent sideways trend.  That could have as much to do with what seems to be a strong month-end buying spree for bond markets combined with spillover from European bond market demand, itself drawing extra motivation from geopolitical risks surrounding Ukraine.  Say that 5 times fast...

Yellen spoke to the Senate Banking Committee today, but there was no significant market reaction.  Some traders, however, fell out of their chair laughing at a few of the questions.  My personal favorite was when Yellen expressed obvious bewilderment at Senator Shelby's failure to grasp the difference between Basel III mandated reserve ratios for Bank MBS holdings and the absence of reserve ratio requirements for the Fed's MBS holdings.  (Disclaimer: I have no opinion positive or negative on the Senator in question, but this particular interchange was highly entertaining on several levels).