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Street Color: Mortgage-Backed Security Spreads Heading Toward Third Day of Tightening, Dealers Say

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Mortgage-backed security spreads are heading toward their third-consecutive day of tightening with $300 million origination so far, traders said. In US swaps, dealers are seeing recovering in treasuries and 30 Years. REIT payers are also around, putting a halt to some narrowing. Deal flow is on the tape with Goldman tapping some aged issues, ICBC and JBIC also announced supply but volume doesn't suggest swapping flows. The chatter from dealers says hedge funds will hold wideners and look for double digits in the 5 Years before taking profits while spread dip buyers stay away from target levels to reinitiate or add to positions, dealers said.

Street Color news alerts are derived from real time conversations with market professionals via the Ask Alyce - Chat Intel service on Bloomberg & Symphony.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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