Agency spreads tighten; FHLB issue at 52.5 bps bid, FFCB at 88 bps

By Lisa Kerner

Charlotte, N.C., April 17 - Agency spreads were "1 to 2 basis points tighter across the curve" on Friday, according to a source.

The short end came in "2 to 3 bps," the five-year sector widened by 1 bps, and the 10-year sector was in by 1 bps," another source said.

Neither source attributed the spread moves to anything in particular.

One source noticed "robust customer buying" on the day." He believes "most people are momentum buyers" who, ironically, buy more when spreads are tighter.

The source said Federal Reserve support for the market through its purchase program is also making it more comfortable for customers to buy.

Trading of the Federal Home Loan Banks new $3 billion 1.375% two-year global bond that priced on Wednesday is "going really well" with a 52.5 bid, a trader said. It came to market at 54 bps over Treasuries.

The Federal Farm Credit Banks Funding Corp.'s $1.5 billion 2.625% five-year Designated Bond, which came out at 92 bps above Treasuries on Tuesday, is now at 88 bps, according to the trader.

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