Last week the market continued to see strong originator selling, though not to the level seen in the previous week - roughly $15 billion versus $30 billion. Despite the recent heavy supply, analysts from JPMorgan Securities remind the market that 30-year net production remains negative, and with reinvestment of heavy paydowns, spreads are likely to hold firm and tighten.

Investor activity was mixed, starting the week off quietly on the threat of war, and picking up as the week progressed. Banks, money managers and CMO desks remained the primary sources of support. Over the Wednesday-to-Wednesday period, spreads on 30- and 15-year discounts tightened 10 basis points on prepayment concerns. Cusp coupons were one to four basis points firmer.

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