If/when yield spreads (relative value) cheapen up as the Fed makes their move toward stage left, there will be more incentive for hedge funds and money managers to become more neutral players too (instead of being mostly sellers). What MBS coupon hedge funds and money managers focus their demand on is partially a function of yesterday's Freddie Mac announcement that they will be purchasing 120+ late loans from their MBS securities. This means there will be an increase in prepayment speeds. If Freddie and Fannie carry out these purchases quickly, the benefits to mortgage rate influential MBS valuations will be short-lived. However, if Fannie and Freddie drag these purchases out over a few months, it will help keep MBS demand focused closer to the coupons that support low mortgage rates. READ MORE ABOUT MBS PREPAY SPEEDS