MBS CLOSE: Charts Of The Rally

22 tick gain in current coupons...  Not bad...

Moving on to a longer view, we are back above some scarier historical levels, and through a recent triangle denoted by the teal lines. 

Although today's movement was obviously catalyzed by Gentle Ben, take a look at the eery horizontal line on the tsy/stock chart.  It shows a more than coincidental support level at the lows from late may and late June.  Stocks on the other hand, may be in a world of their own in terms of the exact index price, however the ostensibly over-exuberant run-up has not yet been confirmed by volume, so the true nature of this beast is still anyone's guess.  Perhaps it doesn't even matter that much today if MBS are going to be allowed to rally in the same direction as stocks. 

Take an inventory of how much of today's gains made it through to your rate sheets.  In addition keep the inherent "sell-off hedging" in mind in deciding lock/float stance over the rest of the week.  Tomorrow is another sparse day for data, and Bernanke takes the headline cake.  Watch out for PAR-nertia with 4.5's at 100-08.  But apart from the caveats, lock/float decisions will likely be more germane if saved for tomorrow.  Bernanke Q and A starts at 10AM again.  We also get the MBA's weekly survey and FHFA's price index, both of moderate but not high performance.  Potential curve balls may come from Wells Fargo and Morgan Stanley Q2 earnings...