Favors 30s over 15s.Based on CSFB’s regression model, 15s are cheaper across the coupon stack. However, the market is re-pricing 15-/30-year swaps to a new interest rate regime, contributing to CSFB’s favoring 30s. Move into 15-years once a stable outlook for curve shape and level of rates is achieved. Maintains overweight on current coupons (30-year 5s and 15-year 4.5s). 5s remain only viable choice in 30s. Rich dollar roll valuations on 5.5s make them especially vulnerable. A 10-15bp rally in mortgage rates could significantly weaken dollar rolls on 30-year 5.5s. Fifteen-year 4.5s will likely benefit from CMO demand and buying from indexed investors.

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