MBS and Treasuries both encountered their first significant instances of resistance in what has otherwise been a relatively uninterrupted rally since shortly after the 830am jobs data. Both markets initially weakened, but MBS now sit at 102-31+ and 10yr yields at 1.961.

Each market is contending with the aformentioned resistance, just beyond current levels, 103-03 for MBS and just over 1.95% for 10yr yields. After failing to break resistance several times around the 10am hour, MBS fell only mildly to 102-30, making for another day of extremely narrow ranges which has been extremely good for pricing. A few lenders were quick to reprice for the better just after the pivot point bounce at 102-30.

"supportive bounce at 102-30 in 3.5 MBS following a 50k beat on NFP..." It's a brave new world... Yes, 3.0 prices are higher and yes they are being traded here and there, but still in very small amounts and in very small proportion to 3.5's. There have been about 3500 ticks of bid/ask updates and/or trade executions in 3.5s compared to about 250 in 3.0s, or about 14:1 since Wednesday. Thinking back to the emergence of 3.5's as viable coupons in which to make markets, it wasn't until that ratio fell consistently under 10:1 that volume began to meaningfully increase. We're getting closer, but definitely not there yet.

Back to the main order of business for a moment... some lenders have repriced, others might, others might not (due to the earliness in the day of the rally), but reprices for the worse are not a concern, so we'd either float until they are, or be afraid of pipeline control reprices which are a distinct possibility this afternoon given record rate sheet offerings combined with the looming possibility of rate sheet adjustments at several lenders due to the tax-cut extension +10bps to G-Fees.