Agency spreads stall, not impacted by latest job numbers; Freddie Mac to add to supply

By Lisa Kerner

Charlotte, N.C., March 4 - Agency spreads saw little change on Friday despite the release of labor figures and continued turmoil in the Middle East, according to a pair of traders.

The spread curve was basically unchanged to Treasuries and a touch wider to swaps, which were tighter in general on the day, said one trader.

Friday was "worse than quiet," the trader said, noting that trading volume was down by about 50%.

According to data released by the Department of Labor's Bureau of Labor Statistics on Friday, nonfarm payroll employment increased by 192,000 in February, while the unemployment rate was little changed at 8.9%, down by 0.9 percentage point since November.

Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.

The news impacted Treasuries "but was like an afterthought for agencies," said the trader.

"People were looking for something more" when it came to the employment news, the second trader said, adding that the employment news was "not that great."

Shorts got squeezed as a result of the job numbers and possible continued concern about the Middle East.

"People don't like to go home short on the weekends," the trader said.

Callables were busy in the morning and then fell off, he added.

Fannie Mae's five-year oversubscribed $4 billion offer was the big news for the week, said the trader, who noted a lot of front-end selling as a result.

Freddie Mae is expected to announce new supply on Wednesday.

Both traders said they would like to see Freddie Mac offer a five-year, given how well Fannie Mae did.

Freddie Mac has not had a five-year offer since September.

One trader said he would bet "a little bit of money" on Freddie Mac's offer being a five-year.

© 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.