There's good news and bad news here...

PRO:

• Both treasuries and MBS are still in better shape than any previous trading levels today
• MBS are 7 ticks up at 100-14
• Failure to break the range doesn't mean you won't still see reprices for the better
• At least we're getting to assess volatility of GAINS today as opposed to volatility of LOSSES

CON:

• Try as they might to get through the better levels set up on Tuesday, neither market was able
• In fact, the technical bounce was about as clear as they come
• At least for now, that means that although some gains are "allowed," prices do not look immediately willing to break those ranges

In MBS, that was the high of 100-21 on Tuesday.  For Tsy's, it was the low yield at 3.71. 

So is this alert about potential reprices for the better?  Or for the worse? 

More likely than not, we're still dealing with reprices for the better.  And those who are at risk of reprice for the worse now are likely familiar enough with the lenders that might do that.  You know the lenders I'm talking about...  The ones that are all over reprices for the better the moment they're justified and not shy at all about taking it away again.  But before you lock on fears of jumpy lenders repricing for the worse, THIS IS NOT A HIGH LIKELIHOOD YET! 

I wanted you to be aware of the failure to break the longer term range.  Until some of the support breaks down in tsy's and until the minor support breakdown in MBS could be confirmed, I wouldn't pull the trigger yet.  If you haven't seen one yet, a reprice for the better is still much more likely than a reprice for the worse.  And most importantly, WE WILL let you know if the 3.74 support in Tsy's or the 100-13 support in MBS breaks down!  This is just about keepin' your finger on the pulse, folks... Stay frosty!