Agency spreads widen 1-2 bps; bullets volume up; Freddie Mac offers three-year Benchmark

By Lisa Kerner

Charlotte, N.C., Oct. 4 - Agency spreads were about 1 basis point wider on the day and 5 bps wider "on the belly of the curve," according to a trader on Tuesday. He attributed the movement to the Fed's Operation Twist and continued upheaval in the European financial markets, particularly Greece.

Bullets saw twice the normal volume at $2.7 billion, while callables were at an average volume, the trader said.

Agencies were more attractive compared to Treasuries.

Swap spreads were also wider on the day, according to another trader.

Agency spreads were 2 bps out on the day overall, in line with swap spreads, he said, also citing news of continued volatility in the European market that now looks to also affect Italy.

The two-year agency sector was 2 bps wider and the 30-year was out "a couple of bps," the trader said. He called Tuesday a quiet day.

Separately, Freddie Mac announced its plans to price new three-year Reference Notes on Wednesday.

The notes were talked at a spread of 34.5 bps over Treasuries.

While the size of the deal has not been set, it is expected to be at least $3 billion.

Barclays Capital, Citigroup Global Markets and UBS Investment Bank are the lead managers.

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