U.S. home loan bonds without government backing were little changed last week after a six-week rally, as buying by Wall Street traders helped keep prices from falling.
Though sales of nonagency mortgage bonds swelled to between $1 billion and $2 billion a day as investors who bought at lower prices sought to lock in gains, purchases by securities firms prevented "prices getting smoked," according to Jesse Litvak, a trader at Jefferies & Co. in New York.
Barclays Capital Inc. analysts also cited dealers' "providing liquidity to the market" in a report published Friday.
"There is really no secret to the fact that the Street has a big bid in here," Litvak wrote in his weekly commentary to clients. "That is the large reason why pricing has managed to hang in there."
Typical prices for the most senior prime-jumbo securities were unchanged last week at 85 cents on the dollar, Barclays data shows. Similar bonds backed by alternative-A loans with a few years of fixed rates held at 68 cents.
The jumbo bonds are up from about 78 cents in early July, and the alt-A bonds have climbed from 47 cents. The jumbo bonds' rally started from 63 cents in mid-March, and the alt-A bonds are up from 35 cents then.