All eyes on Washington DC. Headline news trumps all tomorrow!!!!
5pm Marks...
FN30_________________________ GN30______________________
FN 4.5 -------->>>>
+0-13 to 101-00 GN 4.5
-------->>>> +0-10 to 101-06
FN 5.0 -------->>>> +0-10 to
101-30 GN 5.0 -------->>>> +0-09
to 102-06
FN 5.5 -------->>>>
+0-07 to 102-14 GN 5.5 -------->>>> +0-07 to 102-20
FN 6.0 -------->>>>
+0-07 to
103-07 GN 6.0 -------->>>> +0-06 to
103-04
The Senate is expected
to vote on the Stimulus package any time now and Tim Geithner will announce a plan to save the economy from impending doom at 11am .
DC is the financial capital of the world right now!
CNBC just broke a
story that a "Bad Bank" is NOT included in Geithner's plan. This is according
to a source familiar with the plan". Waiting on more details to go any further....either
way we need all those non-marketable assets removed from balance sheets to slow
the pace of economic contraction. A good start would be to
figure out how much those assets are worth...make a market and see what happens from that point!
IN THE MEAN TIME....markets
just kinda waited around today. Stocks closed flat after an up and down session...bonds
continued to price in supply worries...and MBS outperformed on normal Fed
supported/"latcher on" trading volume. Profit
takers remain so don't get overly excited about floating...follow GUT FLOP. MBS market participants are awaiting some sort of headline event to give them more investment direction. MBS buyers remain at the ready to move down in coupon but will not move their money until they are
adequately convinced that mortgage bankers will deliver 4.0 coupons. If the
Federal Reserve does decide to buy longer term TSYs that is a positive for MBS
markets as spread buyers will flock to MBS. The stack progressively improved
throughout the day and reprices for the better were received. Some of the big
boys didn't pass along any gains so in the event MBS is green tomorrow they
will owe you some YSP.
Tomorrow is the first leg of quarterly refunding. The Treasury department will auction 32
billion 3-year Treasury notes at 1:00. This first auction will help set the
tone for the remaining refundings this week. Besides Geithner's 11am speech he
is scheduled to give testimony on "A New Plan for the TARP" at a
Senate Banking Committee hearing at 2:30pm. Before that hearing Ben Bernanke
will sit before the House Financial Services Committee at 1pm tomorrow. His testimony
is titled "An Examination of the Extraordinary Efforts by the Federal Reserve
Bank to Provide Liquidity in the Current Financial Crisis". I can't wait
to hear Ben's statement.
I know everyone wants to know what is going to happen to MBS
tomorrow and what the prospects are for a huge rally. My response is: who
knows. There are too many "ifs" and "what ifs" to promote a theory. All I can
say is the US Government has committed to spending a large amount of money to
slow the pace of economic contraction...this includes $600bn for mortgages. Whatever the plan may be I find
it hard to believe they will step on their own toes....we are clearly nearing a crossroads though. Be ready for anything!
President Obama speaks at 8pm tonight. Listen to what he has to say and we can go from there...