Fn 4.0-> +0-02  to 100-05+           Gn 4.0-> +0-02 at 100-00+

Fn 4.5-> -0-01  to 101-16+            Gn 4.5-> -0-03+  to 101-19

Fn 5.0-> -0-02+ to 102-14             Gn 5.0-> -0-04+ to 102-22+

Fn 5.5-> -0-05  to 103-00              Gn 5.5-> -0-04 to 103-05+

Fn 6.0-> -0-01  to 103-17              Gn 6.0-> -0-02  to 103-15

Slower than expected prepays moved the stack "up in coupon" last week. After a brief retracement (sell-off), lower dollar prices in the short end of the stack have created an opportunity to do some bargain buying. The timing of the expected refi boom continues to muddle prepayment models, unfortunately this adds uncertainty to the MBS investos decision process (what coupon is most profitable while still protected from prepayments?).

As previously advised we expect this unknow variable to continue to reign in MBS gains while also providing support in sell offs. But the Fed remains a buyer...so volatility will be marginal and a tighter trading range will govern rate sheets