Mortgage activity was mixed last week after a quiet start. There was no meaningful data released until Wednesday's Federal Open Market Committee's statement. In general, however, the tone remained relatively supportive as the market was range bound and Asian investors were back from their week long holiday. Nearly $40 billion in April paydowns were out, and pool allocation on Class A securities was set for last Thursday.
Mortgages added to their performance gains in May, bringing the Lehman Brothers MBS Index to 11 basis points over Treasurys, up from seven basis points over as of May 4. At this point, mortgages are the best-performing cross sector for the month and are even ahead of corporates, which have increased seven basis points so far in May. Year-to-date, the MBS Index is lagging corporates at 14 basis points over versus 23 basis points over. However, mortgages remain ahead of ABS (at negative five basis points) and CMBS (at negative 32 basis points).