Mortgages started feeling heavy last week as the market made further gains. After peaking at 4.892% on Jan. 29, the 10-year Treasury note had rallied 14.7 basis points to 4.745% through Feb. 7. Treasurys benefited from several sources, including a decent Treasury refunding, hedge unwinds of corporate pricings, and an outlook for strength with nearly $47 billion in CMBS conduits showing in the pipeline for February.

After strong MBS selling through most of January as the market backed up on better-than-expected economic data, strong buying emerged as the market found resistance at 4.90%. However, as the market continued to gain strength last week and Asian investors remained essentially sidelined, profit-taking picked up.

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