Mortgages experienced solid two-way flows last week. Originators were relatively heavy, coming with $5 billion plus into the market. This was offset by active buying from CMO desks, money managers, arb accounts, and banks. Indexers were also active in Wednesday and Thursday's trading sessions. For the month of February, the MBS Index extended 0.16 years, about twice as normal.
Through mid-week, spreads on 30-year 6s through 7s were two-to-three basis points tighter, while higher coupons were slightly wider on heightened prepayment concerns. 15-year MBS, which have been generally neglected, saw increased buying interest. Spreads moved in two-to-three basis points in 5.5s through 6.5s, and were one basis point firmer in higher coupons.