Very very choppy still, we've fallen a bit since last post but seem to have found a bit of a line in the sand at 99-29, which we have not been below since 930 EST.  Stay carefully tuned now.  Lenders that priced at either 945EST or 1045EST may reprice an eighth for the worse.  It's still unclear how today will turn out, but it's very likely that we will not make it very high above 100-00 until next week.

The reason for this is that banks cannot hold any coupons above PAR on their books.  So as soon as the 6.0 goes above 100-00, banks have to sell 6.0's within a specified period of time according to their charter.  So this always creates some extra resistance when rising above PAR on a current coupon.

It seems to be a very good sign that stocks are only up half a point at best on news that we'd normally assume would lead to a sharper rally.  This should leave some room for bonds to get the bid either later today or next week.  But things are rough for both sides of the market now as, in the process of typing this, we've dropped from 99-29 to 99-27.  Slightly more evidence for a reprice for the worse, unless your lender priced conservatively this morning.