Last week, mortgage flows were modest as investors evaluated to the strong performance the sector put in the previous week. In that week, there was heavy originator selling, but this was more than met by active buying from all investor types. Last week, however, originator selling was very light and investor activity was mainly focused on roll activity related to settlement on 30-year conventionals and 15-year MBS.

While the strong performance of the sector gave some pause to flows, a heavy corporate calendar also contributed to the lack of interest. High-grade issuance for the week was expected to total around $24 billion, $11 billion of which was the upsized GECC corporate deal. The issue was originally sized at $6 billion, but favorable conditions and strong investor interest encouraged the resizing. The interest in corporates could become worrisome for mortgages as it will draw funds away from the MBS sector.

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