Since the 1pm Treasury auction results were released....

The Dow has rallied 44 points, almost to the highs of the day.....albeit only +18 points.

....AND THE UST10YR YIELD HAS RISEN 6 BASIS POINTS FROM 3.84 TO 3.90!!!

Since then the range we outlined this AM has moderated further loses (UST10YR is technically oversold). In MBS MORNING we instructed this would likely occur given the market's broad array of expectations and investor's need to cover their portfolios from one of the many  hypothetical events that could occur. We were expecting some volatility after the auction..it has occurred, and now we would expect the market to calm down and correct itself.

Here is how the FN 5.0 reacted....

Lower lows. Consolidate and Recover? No. Lower lows. Consolidate and recover? No. Lower lows. Consolidate and recover?

Regardless of whether or not the Dow stays close to flat for the day (which is my bet)...look for the 10 yr note yield to slowly back away from 3.90% and for "rate sheet influential" MBS to stabilize.(COME ON ALREADY...I SEE BUY SIGNALS HERE!!!) If anything else occurs...we will ALERT. Keep your finger near the SUBMIT LOCK button if you are floating short term (I doubt many of you are...most are waiting for rates to come back down right?)

MBS QUOTES