Flows opened last week relatively balanced with participation from a wide range of investors. The activity was boosted by supportive market events such as paydown reinvestments and Class A settlement.

However, things turned choppy on Tuesday with better selling by overseas investors, hedge funds and real money buyers in higher coupon 5.5s and 6s - both outright and versus the curve and swaps. Banks, on the other hand, were better buyers of 6s. Late in the session, equities sold off, sharply driving Treasury yields lower and causing servicers to scramble for duration. Money managers were also actively purchasing. Yields held lower overnight and into Wednesday's session, encouraging better selling based on strength, particularly in the lower part of the coupon stack.

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