Some measure of calmness entered into the global equity markets last week, which was good news for the mortgage sector. With global markets stable to higher, volatility declined, and swap spreads tightened.
The week saw active volume in two-way flows. Although by midweek, buyers were said to outnumber sellers by a ratio of either 2 to 1 or 3 to 1. There was opportunistic buying from real and fast money investors following the recent cheapening on the flight to quality in late February, though investors were easily swayed to take profits on periodic strengthening. Servicers were also strong buyers. Investor interest was mostly in the higher coupons, though money managers were mentioned buying in 5%s and 5.5s%s. Overseas investor interest was nothing to write home about as their participation remained limited given the yield levels and market uncertainty. Originator selling stayed above average at over $1.5 billion per day with supply in 5.5%s and 6%s.