Ahead of Wednesday's statement from the Federal Open Market Committee, mortgage volume was substantially below normal as many participants held close to the sidelines. The overall tone of the sector, however, was supportive though generally tracking the curve and swaps. Asian investors were a steady presence with interest focused in 5s and 5.5s, while money managers and other real money were buying in 5s through 6s. Hedge funds, meanwhile, were two-way while servicers were generally quiet.
Mortgages also benefited from tighter swap spreads and lower volatility as well as limited supply. In the first half of the week, originator selling averaged between $1.5 billion and $1.75 billion per day in 5.5s and 6s.