Agency spreads move out at front end as quarter closes; Freddie Mac to announce on Tuesday

By Lisa Kerner

Charlotte, N.C., Sept. 30 - Agency spreads were 2 basis points to 5 bps wider on the front end of the yield curve, said a trader on Friday, as the month and the quarter drew to a close.

Treasuries had a run and swap spreads blew up.

"We threw an extension party and nobody showed up," the trader said.

There were slightly more buyers than sellers on the day, with sellers down the curve in the front.

"Feds are buying long bonds, which doesn't help agencies," the trader said.

The quarter end forced many investors to do something, but many don't want to invest in anything beyond the five year, the trader noted.

According to the trader, the agency curve flattened by about a third of the Treasury curve, but there was no selling panic.

Freddie Mac is on the calendar to announce a Reference Note on Tuesday. The trader expects it to be a two-year or a five-year offering.

The agency seems less aggressive in its callable funding and seems well funded, said a trader, and therefore, "doesn't have to come to the table.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.