Mortgages were supported by good buying from a variety of accounts last week as investors stepped up to take advantage of recent widening. The focus was primarily in the lower coupons due to the cheaper levels and concern of increasing supply in the higher coupons. Also of note has been increased trading in specifieds. This is not too surprising, as analysts have been touting the sector given current cheap pay-ups.
Also, Ginnie Maes were seeing increased flows last week. One trader attributed this to the roll coming off in Fannie Mae 5s, the fact that 6s are under selling pressure and the GSE headline news.