The mortgage-backed bond market was a bit unsettled last week, sources said, as emerging market concerns sparked increased Treasury buying and mortgage players continued to absorb the Federal Reserve's announcement a week earlier that it had adopted a tightening bias toward interest rates.

In short, spreads have widened markedly since the beginning of the month. According to one MBS trader, the current interpolated coupon showed that mortgages widened from 118 basis points over Treasurys on May 12 to 139 basis points over on May 24 - a 21 basis point widening in about a week and a half.

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