With rates continuing to drop, investors are moving down in coupon. In particular, 6s finally got hit with selling as the roll weakened on prospects of substantial increases in prepayments in the coming months. Investors have begun moving into the new par coupons - 30-year 5s and 15-year 4.5s.

Researchers at UBS Warburg recommend portfolio managers buy these coupons, maintaining that if the market stays at current levels, these coupons will make up a significant portion of outstandings. In addition, if the market holds or rallies, the securities will outperform.

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