Scheduled data is in for the day, and what kind of September would it be if anyone actually cared!

The severity of the sell-off in stocks yesterday is creating some "pendulum" buying this AM with the Dow out of the gate over 200 and the S&P pushing 30.

After yesterday's en masse FTQ dash, this is keeping treasuries in check. Looks like MBS have found their spread trading range as they are tracking treasuries with, dare it be said, an almost STEADY regularity. But with stocks at these levels, the entire FI stack is a bit of a laggard at the moment.

5.5's are down an eighth so far at 100-12+. This is very likely NOT enough for lenders to be considering a reprice for the worse, and even then, it would only be lenders that came out EARLY EARLY and relatively aggressively too. This is more of an alert to perk up your eyes and ears in case we slide further.

A slide may indeed be in the future, but if the conventional wisdom is a guide, a slide today would affect treasuries more than MBS due to the probably culprit that would push the selling: additional "bailout buzz." In other words, in order to mount a meaningful rally (remember, 200 points up in the DJIA is not even a return to "going out levels" as the index sold off substantially after the closing bell), we'd have to see at least SOME measure of hope for an iteration of yesterday's bill proclaimed to be "on track" for later this week. The current word around the campfire seems to indicate Thursday. Good for treasuries this ain't, however, because of the direct implications for MBS, even a large stock rally would still not preclude MBS strength.

All this is moot when you accept the fact that the reality of the capital markets is being defined in real time as you live and breathe. What is true and insightful now is no guarantee of the same 5 minutes from now. With that in mind, the only advice that is reliably sound is this: stay closely tuned and be ready to act. As always, we'll keep you updated.