Tomorrow offers up vastly more in terms of economic events for the mighty stock market to devour on it's way back to summer prices. At least that's what today's price action in stocks would seem to suggest. Considering stocks carved out another multi-month high today, bond markets held up fairly well. 10yr notes are headed out around 2 bps higher and Fannie 3.5 MBS only 3-4 ticks lower. Tomorrow's line up includes

9am - Case-Shiller Home Price Index
10am - Consumer Confidence
10am - FHFA House Price Index
1pm - 2yr Treasury Note Auction

For more info on the forecasts for tomorrows data, see MND's "Week Ahead:"

While we're not sure how many lenders are in much of a position to reprice for the better, we like how MBS are performing versus Treasuries at the moment as well as how the trading range of MBS prices has narrowed and somewhat improved since this morning. It doesn't seem like we'd to see these current phenomena play out much longer before a lender or two repriced for the better.

Keep in mind, we're not quite there yet and we also might be somewhat reliant on at least SOME stability in Benchmarks. Seems like 2.23-ish in 10's is a decent line in the sand, above which, our hopes for MBS gains would start to fade. Still very much a work in progress, but has been moving in the right direction in recent minutes.

We've discussed the significance of the Fed's recent decision to specifically include a nod to MBS in the last FOMC Statment where Operation Twist was announced. It seemed too coincidental that MBS spreads were on a "crash course" of sorts, with the desuetude of Fannie/Freddie and HARP 2.0 speculation--almost TOO coincidental.

It was reminiscent of the last time spreads were on a major crash course when even the unveiling of the conservatorship couldn't turn the tides of widening spreads, albeit on a smaller scale this time. But just because the Fed hasn't announced another $1.5 Trln of new MBS purchases doesn't mean they're any less keenly focused on how MBS are performing in a market where the housing situation is seen as an integral part of the solution.

If anything, on the spectrum of MBS spread, the Fed acted SOONER this time than in 2008. Granted, there are detractors from this notion of the Fed acting as a protector of MBS spreads, but then there's William Dudley, the President of the New York Fed--you know, the one that actually handles the FOMC's directives in the MBS market--saying the following today:

"The fact that we decided to reinvest maturing funds back into the agency mortgage-backed securities market I think is a signal that we have some concerns about the level of mortgage spreads, and certainly that we do care about housing affordability as a way of supporting economic activity."

Just another piece of evidence in whatever case you're comfortable building for the Fed's ongoing role as the MBS spread backstop.