Mortgages were hit with strong selling last week with investors shedding duration as the market backed up on stronger-than-expected economic data and uncertainty regarding Friday's employment report. On Wednesday alone, there was $4 billion dumped on the market, half from originators and servicers and half from other fast money. While demand was limited, there was some month-end buying noted and other real money was coming in at the cheaper levels.

There is not a lot of reason to like mortgages right now. While volatility tends to dip after the payrolls report, the curve continues to flatten and there are additional Federal Reserve interest rate hikes on the horizon. Other negatives include increasing supply with limited demand sources.

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