There was plenty of activity in the mortgage sector last week. Banker selling picked up and averaged about $2 billion per day. About 80% of the supply was in 30-year 5.5s and 6s, and the remainder in 15-year 5s. Offsetting supply was good buying from money managers and banks, primarily in the lower end of the coupon stack.

Over the Wednesday-to-Wednesday period, spreads were one and two basis points wider in 30-year Fannie Mae 5.5% and 6% coupons, respectively; and two and five basis points weaker in dwarf 5s and 5.5s. Higher coupons in both sectors moved out 10 basis points or more.

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