Mortgage Back Securities Rebound

Good morning – I hope you all had a nice weekend!

After a strong run last week as earning season started and a high open this morning, stocks are back in the red. At the beginning of last week – we talked about Citigroup’s Panic / Euphoria model reading of 2.1 (5x the base euphoric level). This morning’s reading came in at 1.89, a slight drop but still an enormously euphoric level.

Mortgage Backed Securities continue their 9 day climb, up another 11 bps this morning. After falling through so many floors of support in the beginning of January, they have made back up about half of their losses from those record levels. These gains are largely due to a pull back of treasuries after their spike at the beginning of the month. Treasuries fell below a Fibonacci level this morning and have much more room to fall before their next floor. We are holding a locking bias unless you are able to closely watch the market as MBS’ battle a couple more ceilings.

Have an awesome day!