Agency spreads quiet; two- to five-year sectors react to $1.4 billion issue from FFCB

By Lisa Kerner

Charlotte, N.C., Jan. 12 - Agency spreads "didn't do a great deal" on Tuesday, according to one trader.

The seven-year and out sectors were quiet, said the trader, while the two- to five-year sectors widened about 1 basis point.

He attributed the widening to Federal Farm Credit Banks Funding Co.'s announcement on Monday of a $1.4 billion Designated Bond and Fannie Mae's benchmark-size security expected on Wednesday.

Another source said agencies were "taking a pause" as the curve flattened and stocks acted "shaky."

Callables tightened 2 to 3 bps, said another source who noted heavy buying on the day and an active start to the week, probably in reaction to a big rate movement last Friday.

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