Last week analysts from Morgan Stanley recommended restoring exposure to MBS to a moderate overweight for active investors as fundamentals for MBS have become more aligned with favorable technicals. Morgan has been recommending maintaining a core overweight for long-term investors.

Morgan's mortgage strategist, Yubo Wang, commented that rates "reversing a multi-week rally, moved higher on growth/rebound expectations, reducing prepayment and convexity concerns". He added that lower MBS dollar prices added additional appeal.

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