After a strong month, profit taking picked up last week as the market traded off ahead of this week's Federal Open Market Committee meeting and as Asia prepared for public holidays to celebrate the Chinese New Year.

The week started off, however, on a strong note with solid buying from all investor types. Positives that got the week going included the lowest level of dealer inventories in 12 months; the recent FNMA 5% mega news that suggests there was heavy bank buying in the latter part of 2005 that settles in the first quarter 2006; and PIMCO's news that over 60% of its assets are in MBS. Also benefiting mortgages has been the favorable technicals, as supply has remained lackluster and the low level of volatility.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.