Agency spreads widen on the day but remain narrow; new supply in sight from FHLB

By Lisa Kerner

Charlotte, N.C., March 30 - Agency spreads remained narrow, as they have been for the past couple of weeks, according to a source on Tuesday.

Callables were expensive to bullets for two years and shorter, the source said.

"Everyone is looking for that extra bit of yield," said the source, and customers are seeing if they can pick up an extra basis point or two.

Agency spreads felt some pressure on the day due to activity level, according to a trader.

He said agency spreads widened on Tuesday, with the short end out by half of a basis point to 1 bp, the five-year sector moving out by "a couple" bps and the 10-year widening by 2 bps to 3 bps.

The trader noted the week was a little slow due to what he called the "holiday situation," the month-end and the fact that people often don't want to own agencies on the 31st day of the month.

Looking ahead, the trader said supply is expected next Tuesday from Federal Home Loan Banks.

© 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.