Mortgage activity last week was uneventful and uninspiring. Originator selling averaged about $1 billion per day and was mostly in 5.5% coupons. Investor activity was mixed with profit taking by money managers and banks in higher coupons moving down in coupon into 5s. This situation was masked by higher coupon buying from servicers and foreign investors into 5.5s and 6s.
Month-end index buying was anticipated for Friday's session. According to Lehman Brothers, the MBS Index is forecast to lengthen 0.09 years, the same as January. In other sectors, Lehman calculates that the Treasury Index will lengthen 0.8 years due to the Treasury Refunding; the Agency Index is set to add 0.06 years; and the Credit Index should increase 0.06 years. Overall, Lehman estimates the Aggregate Index will extend 0.08 years.