Mortgages continued to perform well through the second week of the New Year despite 10-year note yields declining below 1.90% (to 1.857% Friday morning) on continued uneasiness associated with Europe.

Aiding the supportive tone was preference by investors for the yield, high credit quality and liquidity provided by Agency MBS versus other sectors. Month to date excess return versus Treasuries on Barclays Capital's MBS Index was at +33 basis points through January 12 versus +17 basis points the close of last week.

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