Last week, the subdued flows favored up-in-coupon trades in both the 30- and 15-year sectors. Activity was supported by a wide range of accounts including banks, money managers and hedge funds in the early part of the week. However, profit taking became evident at the latter end. Buyers are likely to be less active until the 10-year yield crosses above the 4.85% level.

Roll-related trading was also evident all week with 48-hour notification beginning on Thursday for 30-year conventional MBS. The 6% coupon, in particular, held very special. One trader recently remarked on this situation, suggesting it could push higher into notification as dealers and investors cover front-month shorts. He also said there were still very few sellers of the roll.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.