Washington D.C.

- By Adam Quinones.

Early MBS trading is a snoozer….the 5.5 FN MBS is down 2/32. The 6.00% FN MBS is unchanged.

Last week was a little more exciting, the benchmark coupon "title belt" changed from the 6.0% back to the 5.5%. Overall the 5.5% MBS was up 67 ticks for the week ending November 7. That is a price increase from 97- 26/32 to 99- 29/32 which equates to 209 bps better in FN 5.5% MBS pricing. In very plain English mortgage rates radically improved for the week. If you were looking for the best time to lock last week, Wednesday was your day to cash in/get your borrower the best deal.

Looking at the charts the recent rally, again, has run into a well developed resistance line which has been tested and re-tested twice in the past two months. In each instance aggressive selling/profit taking probably left you scratching your head as your inbox filled with investor re-price notifications. The initial euphoria created when Hammering Hank and his posse of big brained quantitative thinkers decided that Fannie/Freddie needed to be babysat has slowly dissipated due to a lack of new TARP developments or as I like to say…the cold shoulder being turned on us. That said, previous trading behavior indicates that this firm resistance line will remain strong until TARP/MBS headline news gives the market some new developments to chew on….

By now it should be apparent that TARP news is highly important if we are to see new mortgage rate lows any time soon.

While we wait, with so little attention being placed on economic reports I will continue to watch my charts and look for new trend developments. As far as the "how low will it go" question…a less matured support line has developed near 97 -19/32, although not a strong support level, it is a decent gauge of a short term bottom. From a technical perspective this trend suggests a potential drift towards the 99- 19/32 price region until disrupted by TARP news.

Keep an eye out for Treasury press releases RE: Emergency Economic Stabilization Act…

Speak of the devil : Treasury to Invest in AIG Restructuring here is the media story from Bloomberg.