MBS volume was average into midweek with hearings in Washington, the announcement of a new financial aid plan, a Senate Stimulus Bill vote and the American Securitization Forum conference held in Las Vegas providing distractions.

Mortgages rallied on Monday as Treasurys sold off modestly in front of the $67 billion quarterly refunding, while equities held in a holding pattern as participants waited for Treasury Secretary Timothy Geithner's plan and a Senate vote on the Stimulus Bill. The day saw buying from money managers, overseas investors and the Federal Reserve, while supply was limited to just $1 billion. Some real and fast money profit taking showed up later in the session on the strong gains, but spreads still closed eight ticks tighter to the curve and swaps on 4s through 5s, while higher coupons tightened less.

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