Mortgage flows have been at the mercy of Treasury market performance. Last week, the sector was mostly hit by supply, increased investor selling and limited buying as the market traded south. The one exception was mid-week when Treasurys stabilized and held higher throughout the session. This encouraged investors to take advantage of the recent widening in spreads.

Over the Wednesday-to-Wednesday period, spreads on 30-year Fannie Mae 5s were one basis point tighter, while 5.5s and 6s were wider by 10 and seven basis points, respectively. The trend was similar in Dwarfs with 4.5s also one basis point tighter over the week, while 5s and 5.5s were plus eight and seven basis points.

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