Mortgages are off to an okay start in April after a disastrous March. The MBS Index has returned plus seven basis points in excess return versus Treasurys in the first three trading days of April, according to Lehman Brothers.

Flows last week were modest, but mostly supportive in anticipation of late week positives. One was the reinvestment of March paydowns, which is estimated at over $40 billion. The second factor was the expectation of a downtick in volatility following the employment report.

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