MBS are up +9/32 (FNMA 30-yr 3.0 at 102.31), around 14/32 higher than Friday at this time. Favorable repricing was seen Friday. This morning, investors are focused on the news of a controversial EU bailout proposal for Cyprus. The EU will provide a 10 billion euro bailout only if Cyprus taxes private bank deposits at a 6.75% to 10% rate, depending on account size. Without the bailout, Cyprus faces a high risk of default. The bank tax is hugely unpopular, however, and the government has postponed a vote until tomorrow to try to develop a more acceptable alternative plan. The uncertainty has caused a flight to safety, lifting MBS and hurting stocks. The Dow is down 75 points. No economic data will be released today.