Agencies react to Fannie Mae five-year Benchmark Notes set to price Friday; strong demand seen

By Lisa Kerner

Charlotte, N.C., Sept. 23 - Agency spreads did not change dramatically on the day, but news of supply from Fannie Mae pushed the five-year sector out 5 basis points.

The two- to three-year sectors moved in ½ bp while the 10-year remained unchanged, said Brandon Wann, a trader with Vining Sparks.

Fannie Mae announced that it will price five-year Benchmark Notes on Friday.

Spread talk remained at 36 bps over Treasuries, a market source said.

While there had been talk that Fannie Mae would pass on the issue, Wann said that demand for a five-year is strong.

According to Wann, these deals have been "blowing out."

Wann said he also sees strong demand for step-ups right now because rates are low and spreads are tight.

In general, people are waiting for higher interest rates.

And with the quarter nearing an end, Wann said, "Everyone is protecting their portfolio."

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