Remains long passthroughs vs. treasuries. Favors 5.5s over every other coupon in the stack . Thirty-year 6s still offer the most hedge-adjusted carry in the sector, although the amount that 6s out carry 5.5s is marginal. Any further movements to lower yields should pressure 6s relative to 5.5s as the 6s are now back above 104-00, a level that has caused problems for this coupon in the past. GNMAs have been under steady pressure for the past several sessions and the only buyers seem to be short covering. Expects further declines in the GNMA/FNMA swaps.

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