As the market initially strengthened at the start of last week and then began to sell off on Wednesday, MBS participants were generally better sellers, with flows directed up in coupon. Asian investors were again on the quieter side as yields moved toward 5% on the 10-year Treasury. On a positive note, however, originators were relatively light, averaging around $1 billion to $1.5 billion per day, down from more than $2 billion in recent weeks. Overall, volume was slightly below normal into midweek.

One pierce of excitement on Tuesday was good support for 30-year Gold 6%s and 6.5%s. Apparently, the latter benefited from hedge fund buying in anticipation of continued buying from Asian investors, while the former was helped by a deal bid.

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