Is there ever a day that mattresses are not “on sale”? Securities are always for sale. I love this kind of talk: "Agency MBS reversed course this week as much of the coupon stack underperformed against duration hedges." That is what I received from a buddy who works for a large investment bank. What the heck does that mean, and does it mean anything to some broker who has a client waiting for 4.875% to come back? Not really. On any given day, investors in fixed income securities have a huge number of options from which to choose. They can buy government securities, corporate bonds, municipal bonds, mortgage-backed securities, the list is too numerous to detail here. At the moment, agency MBS securities backed by Freddie & Fannie loans) are looking fairly priced versus Treasuries. And speaking of Treasury securities, the yields on two-year note yields rose above 1% for the first time this month, and the 10-yr Treasury hit 3.50% this morning. The Fed's MBS program, which many mortgage bankers believe is still the only thing keeping mortgage rates as low as they are, still has the capability to absorb close to $15 billion a week through the end of the first quarter. Whether or not this is enough to soak up the current production remains to be seen. Many banks, however, are selling their holdings of mortgage securities due to the large profits contained in them. Their profits are helped, but it doesn’t help current production, although they may go out and buy current production. continue reading CLICK HERE