Mortgage flows last week were two-way with participation from both domestic real and fast money. However, overall volume was modest, starting off rather light while the market was waiting for the outcome of the Federal Open Market Committee's meeting on Tuesday. Activity picked up after the FOMC statement was released.

The week saw the 10-year Treasury back up 18 basis points to 4.85% as of Thursday morning. So far, there has been no panic selling in the sector on servicer selling fears, and flows have been orderly. Servicers were only modest sellers; moving up in coupon into 6s and 6.5s as the curve steepened late week. They are expected to become more active after the market breaches above 4.90% and towards 5.0% on the 10-year Treasury.

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