Favors 30- over 15-years, primarily due to outlook for a flatter curve and low volatility. Maintains overweight on current coupons (30-year 5s and 15-year 4.5s). Though range of available coupons seems wide, actual alternatives are limited. CSFB’s near-term prepay forecasts imply a negative carry on 30-year 6.5s; potential for further negative prepay surprises on 6s partly drives negative view despite sector’s cheapness. 30-year 5.5s and 15- year 5s have well-entrenched index investor base, but are at the cusp of strong jumps in speeds. CSFB’s rate and volatility outlook, expected bank demand and CMO desk interest and potential Agency demand form basis for recommendations on current coupons.

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