Agency spreads begin week tighter; FHLB expected to add to supply

By Lisa Kerner

Charlotte, N.C., May 26 - Agency spreads began the shortened week "a little tighter to unchanged," according to a trader.

The trader said the short end was in by 1 to 2 basis points, the five-year sector was unchanged, and the seven- to 10-year sector were tighter by about 1.5 bps.

He noted that Treasuries were "sloppy" and "look ugly," which makes agencies "look more attractive."

Looking ahead for the remainder of the week, the trader said on Wednesday Federal Home Loan Banks is expected to announce a new Global Notes issuance. While there was no word on possible size, the trader expects the offering to be structured as two- or possibly three-year notes.

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