The first part of the week saw better selling - especially in 5.5% coupons- as the 10-year yield backed up towards 4.40%. Servicers, in particular, were actively selling 5s to move up in coupon or out of the sector. Originator selling held to its $1 billion per day average. Supply continues to be in 5s and 5.5s, although there was some selling in 6s.
The sector saw more balanced flows midweek as real and fast money entered the picture to take advantage of the recent weakening. While the backup would normally attract overseas buying, it was limited last week as China was on holiday.