Low trade volume in the MBS market is a fact of life this time of year.  It normally creates a bit more choppiness than normal and unreliable price levels.  So we've been waiting with bated breath to see if the "nice" end to Friday's sparsely-traded session would get credibility when the volume expectedly picked up this AM.  Pleased to report: so far so good.  In fact, we've opened a bit further up as this two day chart will show.  The 4.5 is currently at 101-17, which is above the "base-camp" level of 101-14.

Even though the lowest volume days are behind us, this week doesn't promise to be a whole lot better.  We have no scheduled data today and the normally busy "month-end" week, normally MBS-bullish, will be muted by holiday absenteeism.  This means a few things.  First of all, lower volume means that prices can continue to be a bit choppy.  Second of all, in low volume trading, price levels are not as reliable so lenders may account for thinly traded conditions (although it's been our experience that many will NOT).  The bottom line is to not get too disheartened if prices fall, nor too excited if prices rise, as a different reality might manifest itself when volume makes its expected return to normal next week.

We'll let you know if prices fall enough to be of concern, but so far this morning offers clear float indications.

In other data:

• Stock futures are relatively flat
• treasuries are slightly improved with the 5yr at 1.44, 10yr at 2.11
• Swap Spreads are down a bit from Friday with a 2yr spread at 63 bps (long story short: credit is flowing)