While fears of inflation, prompted by an unusually high index number from the National Association of Purchasing Managers (NAPM) early in the week, sustained the overall uncertainty in the bond market, a major sell-off in mortgage securities provided a good opportunity for some buyers last week.

"All of the worries regarding economic numbers and interest rates have been benign," said Michael Youngblood, managing director for mortgage securities at Banc of America Securities. "Spreads have actually come in since the week before."

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