In what has been an unanticipated slow start to the year due to unusually low early-year supply, the mortgage-backed securities market has seen a small increase in some supply this week. It is still a strong market nonetheless.

"The mortgage bankers came in yesterday, and we saw some supply," said Art Frank, head of MBS research at Nomura Securities. "In spite of that, mortgages are doing very well. We're tighter to swaps, we're tighter to agency benchmarks. We're a little ahead of ourselves vis-a-vis competing spread product."

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