Mortgages saw active two-way flows last week. Of particular note was a pickup in originator selling as the market continued to back up following strong upward revisions made to employment and comments from the Federal Reserve minutes saying that inflation risks remain. Daily average selling was near $2 billion, versus a normal daily average of $1 billion. Supply consisted largely of 6s and, to smaller extent, 5.5s.

The recent backup did encourage buyers in mortgages to appear, notably Asian investors as yield levels and prices became more palatable to them. Domestic investors included a variety of real and fast money types, including servicers. Buying was both up and down the coupon stack.

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