Last week saw good two-way flows early on as originators brought nearly $3 billion on Tuesday and Wednesday, mostly in 5.5% coupons. Money managers and hedge funds readily absorbed it. Banks were mixed with profit taking noted; however, they were also strong buyers of 6% coupons. Finally, 5s saw good demand from CMO desks.

Over the past week, spreads on 30-year Fannie Mae's were flat in 5s and 6.5s, and one to two basis points tighter in 5.5s and 6s. Meanwhile, 15-year collateral did slightly better with 4.5s firmer by three basis points; 5s were two basis points tighter; and 5.5s in one basis point.

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