Two-way flows were modest last week on expectations of much better buying, as valuations have cheapened to levels not seen in quite some time. Yield curve movement, however, did not really settle down and provide a clear direction, limiting investor support. There was some light overseas buying noted with more expected at current levels. Also anticipated was month-end buying from the indexers, which tends to show up on the last trading day of the month. Meanwhile, servicers were active sellers over the week, particularly in 5% coupons and originator selling in fixed-rate supply has returned to its $1 billion daily average.

More positive on the basis

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