The mortgage market was not too active last week, as rich valuations and the wait for Friday's non-farm payrolls report stalled activity. Flows, however, were two-way. Originator selling averaged about $1 billion per day and was offset primarily by support from banks, insurance companies and hedge funds.
The big story of the week was the squeeze in Ginnie Mae MBS. The sector gained from a dearth of supply and strong CMO demand. Supply is expected to pick up as conventional settlement closes in. JPMorgan Securities expects Ginnie CMOs to reach $10 billion for November, mostly in GNMA II 5.5s.