Mortgage volume was running substantially below normal through midweek with spreads steadily widening despite buying support from money managers, hedge funds, banks and the U.S. Department of the Treasury.

Factoring into the poor performance was CMBS widening as a result of the probability that two JPMorgan commercial loans originated last year were likely to default. This added to investor concerns over the financial crisis extending into another sector. Since the economic slowdown affects consumer spending, this is expected to, in turn, impact hotels, offices and shopping malls.

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