Originator selling last week averaged nearly $4 billion per day, mostly in 5% coupons, as the market sell-off finally provided originators with an opportunity to sell. Mortgage spreads widened on the supply early in the week as investors showed little interest with yields continuing to rise and volatility increasing. Late in the week, however, investors showed increased interest as the wider spreads drew in a variety of buyers. In addition, there was profit taking noted in 5.5s to move up in coupon.

Over the Wednesday-to-Wednesday period, spreads on 30-year Fannie Mae 5s widened 12 basis points, 5.5s were five basis points weaker, and 6s tightened four basis points. In Dwarfs, 4.5% coupons were flat as investors sold 30-year 5s to move into Dwarf 4.5s. Meanwhile, 5% coupons were three basis points wider over the period.

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