Heading into 2010, the  mortgage market was looking at the Federal Reserve winding down its purchases of agency MBS with spreads projected to widen and yields/interest rates to rise as a result. Meanwhile, technicals were expected to deteriorate to some extent with the removal of such a large buyer. 

Some of the beginning-of-the-year projections were for spreads to widen around 30 basis points to 40 basis points following the Fed's exit; for the spread to 10-year notes to increase to 115 basis points; for the 30-year fixed mortgage rate to average 5.8%; and for the 10-year notes to average 4.03% in the fourth quarter.

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