Mortgages broke their nine-day losing streak on Tuesday as buyers finally emerged on the cheapening, and sellers took a break as the market moved higher. The better buying continued into Wednesday and Thursday's sessions, despite the looming Federal Open Market Committee statement on Thursday afternoon. Based on Lehman Brother's MBS Index, month to date mortgage performance improved to negative nine basis points (in excess return versus Treasurys) from negative 20 basis points through the close of Monday, June 26.

Investors were primarily moving up in coupon into 30-year 6.5s and 7s given the risks of a slowing housing market. The buying was widespread and came from banks, money managers, insurance companies, hedge funds and servicers. Asian investors, however, remained absent. Alec Crawford, managing director and head of agency MBS strategy at RBS Greenwich Capital, said that the Asian investors that RBSGC traders have talked with have stated that they are interested in investing, but they are waiting until the Federal Reserve is done raising interest rates before committing funds.

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