After outperforming Treasurys by 46 basis points (Barclays MBS Index) over Thursday and Friday in the week of the Federal Open Market Committee's (FOMC) QE3 announcement, last week began with active selling from money managers and hedge funds.

Added with average supply, it was too much in fact for the Federal Reserve to absorb despite its voracious appetite that equates to a $4 billion per day average. By Tuesday's close, the index had given back 14 basis points.

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