Last week started off with better selling, especially from originators, as investors quietly waited for the FOMC meeting to conclude. Since Friday, Sept. 12, mortgage bankers have sold more than $13 billion. Most of the supply was in 30-year 5.5s; however, selling included 5s.
Mortgage buying picked up following the FOMC announcement. Buyers, who had been sidelined, came in and scooped up 5.5s, which have become the cheapest coupon on the stack following the heavy supply. As rates continued to rally on the week, increasing interest was seen in 5s.