MBS OPEN: NEARLY FLAT AS TSYs SELL

Good Morning. At the open MBS prices are nearly unchanged from yesterday's going out levels. The yield curve is steepening as Treasuries sell into the open. So far MBS are outperforming TSYs  all the way into the FN 6.0 coupon (spreads tightening 4.0-6.0). This morning if TSYs continue to sell...MBS should continue to outperform but prices will nonetheless be under pressure to trade to the downside....

US stock futures are indicating a positive open. Overseas in Asia and Europe equity indexes are trading marginally to the upside.

FN30__________________________________

FN 4.5 -------->>>> -0-04 to 100-29 from 101-01

FN 5.0 -------->>>> -0-01 to 102-01 from 102-02

FN 5.5 -------->>>> -0-00 to 102-19 from 102-19

FN 6.0 -------->>>> -0-00 to 103-06 from 103-06

1 month LIBOR is slightly higher this morning.

3 month LIBOR is slightly lower this morning.

Yesterday's Effective Fed Funds Rate was 0.23