Mortgage activity was quiet in the holiday-shortened trading week. Unlike the previous session when convexity-related trading dominated, last week carry and low volume took precedence. This led to more up-in-coupon trading. Also contributing to the move higher in coupon was the better performance in discount coupons on the recent strong rally.

Over the past week, spreads were 11 basis points tighter in 30-year Fannie Mae 4.5s; five basis points better in 5s and 5.5s; and four basis points firmer in 6s. In 15s, spreads moved in four basis points for 4s and two basis points for 4.5s. Higher coupons were flat to slightly wider.

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