1. Prepayments may slow to a crawl if the IRS doesn't give underwriters timely tax information on borrowers in escrow.
2. If furloughs and wage back pay uncertainty dampen the economy the Fed will prolong QE.
3. If as you say treasuries soar again that of course would be good for BV. I don't count on that happening. The shutdown the GOP made a Dimocratic president (Clinton) commit to balanced budgets, which was supportive of UST. We are no where near negotiating that level of financial responsibility this time around.
You're right. The reason the Taper talk in May caught so many people flat footed, Gunlach, Kain, myself included, was because the economic data didn't suggest any change in course for the Fed. I think the taper talk was originally given for political reasons, an attempt to dominate and intimidate Congress with Fed bankster rule. I think Ben Shalom wanted to scare them into fiscal easing so the banksters would have more defecit spending to monetize without liquidity concerns. Those liquidity concerns will probably force them to taper soon though.