Through midweek, MBS volume was running close to average in mostly supportive flows. Monday started off rather quiet with mortgages weakening on profit taking, following its recent strong gains.

Contributing to the silence were various holidays around the globe. Tuesday opened with further spread weakness following the release of Fannie Mae's substantial first quarter earnings loss. However, it quickly turned around as real and fast money and overseas buyers emerged. Interest was focused primarily in the belly of the stack. Wednesday saw support from reinvestment of April paydowns totaling over $58 billion. Noted specifically was buying from servicers and real money with flows directed up in coupon following the slower than expected prepayment news.

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