Agency spreads widen slightly on expected announcement of Fannie Mae Benchmark Note Tuesday

By Lisa Kerner

Charlotte, N.C., June 13 - Agencies were quiet on Monday, with spreads mostly unchanged, according to Mike Goldman, director, head of agency trading, Guggenheim Partners.

"Not a lot has gone on," said Goldman regarding Monday's activity.

Craig Ziegler, managing director of rates, Gleacher & Co., Inc., said agency spreads started the day unchanged.

However, he noted some widening in the front end, about half of a basis point, in anticipation of the Fannie Mae Benchmark Note announcement on Tuesday.

The curve ended the day about half of a basis point wider, according to Ziegler.

Ziegler feels that Fannie Mae will come through with $3 billion to $4 billion of two- to three-year notes.

"All of these new deals have done well," said Ziegler.

Goldman is not so sure and would possibly bet on Fannie Mae taking a pass tomorrow or, if anything, coming out with a two- to three-year note.

Looking ahead, Goldman said, "A movement to higher rates could create customer buying of agencies and a tightening of spreads."

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