At 1:35 PM, the Fannie 4.0 peaked at 102-02.  Just an hour later, prices had fallen to 101-20 before sliding to 101-15 (pretty much this AM's levels) at the 3pm mark. 

Bottom line with respect to this AM's hints of stabilization: IT'S NOT TIME YET!

What does that mean? 

It means that there is a lot of confusion in the markets at the moment.  No one knows exactly how to play that which has never been played before.  Everyone is looking at each other, asking if it's time to go long treasuries yet (because believe it or not, the market does, in fact, SEEM to understand that 600 billion dollars of buy side in treasuries will theoretically result in lower yields).  And although that question may have actually had an answer last week, today was more like forced/snowball selling as those positions taken out before QE had to be redistributed at these new prices (lower prices, higher yields).

Net effect for MBS is ugly:

Reprices the worse have either already arrived, or will be soon in most cases. 

In lieu of repeating that which has already been stated, (READ MORE...)