The holiday-shortened first week of July and third quarter had its own brand of fireworks with more records set on various MBS benchmarks as central bank easing actions in the European Union and China, along with weak economic news, kept the bid on risk aversion.

New price highs were set in mortgages on 30-year 4.5% coupons and lower as prospects remained favorable that the Fed would engage in additional quantitative easing. Friday's employment report, as usual, was particularly viewed as having a significant influence on the odds. For sure a disappointing print of +80k versus a consensus expectation of +90k did not reduce them. At this time, Bank of America Merrill Lynch analysts are expecting the Federal Open Market Committee to launch the third round of quantitative easing in September with an additional $500 billion in asset purchases.

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