Last week the buzzwords changed in the mortgage market as duration hedging picked up.

Lehman Brothers discussed this issue in a report released on Monday. "For the most part, mortgage investors seem to be still focused on extension fears and the sector has done well in the past week's rallying environment," analysts wrote. "However, there has been a significant buildup in call risk for the sector due to overall higher rates as well as a greater proportion of lower coupons in the mortgage universe."

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