The wait for the Federal Open Market Committee's (FOMC) decision on Wednesday afternoon contributed to limited volume in the first half of the week.

On Monday and Tuesday, mortgages significantly underperformed the curve and swaps on overall better selling - particularly from servicers who were shedding duration following the recent backup in yields. On Monday, convexity-related selling reportedly totaled $3 billion. Adding to pressure that day was selling from hedge funds, insurance companies and banks, also in the lower part of the stack (5s and 5.5s), in part to move up in coupon.

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