Yields on agency mortgage securities compared to U.S. Treasuries approached a five-month high today. Spreads rose to 215 basis points in intraday trading today, the highest level since early Mach 10, just prior to the crisis that leveled Bear Stearns, according to data compiled MKM Partners analyst Mike Darda. Over the past drbrtsl several weeks, the spread has been edging toward the 22-year high of 238 basis points set in March.
The so-called "agency mortgage bonds" amount to a $4.5 billion market guaranteed by federal agency Ginnie Mae or government-backed Fannie Mae and Freddie Mac. The rise of the spreads is widely viewed as a sign of stress in the financial system. More specifically, many believe that despite government moves to shore up Fannie and Freddie, the odds of the guaranteed bonds defaulting has increased.
Posted by guest , Aug 14, 2008 4:37PM
I think you mean $4.5 trillion market, Carney. $4.5 billion is 1 trade...
Posted by guest , Aug 14, 2008 4:40PM
Has it really been drbrtsl weeks since we were last at this level, Carney?
Posted by guest , Aug 14, 2008 4:45PM
do these posts even get proofed before they are posted?
Posted by guest , Aug 14, 2008 4:56PM
Drbrtsl = several.
Sincerely,
Sherlock Holmes
Posted by guest , Aug 14, 2008 4:59PM
And Sherlock-
Does billion = trillion?
Posted by guest , Aug 14, 2008 5:09PM
@5--
Nope, billion = no;;opm
Posted by hedge , Aug 14, 2008 5:34PM
He's givlomh with you guys. Tr;sc.
Posted by John Carney , Aug 14, 2008 5:44PM
Weirdest typo ever.
Posted by BlackSwan06 , Aug 14, 2008 5:51PM
twas brillig.
Posted by guest , Aug 14, 2008 6:17PM
@9: Ksnnrtepvlu.
Posted by guest , Aug 14, 2008 9:52PM
Could the spread reflect prepayment risk? Lower mortgage interest rates would have to be a goal of the monetary authorities now to boost housing.
Posted by guest , Aug 15, 2008 6:32AM
kthxbye
Posted by guest , Aug 15, 2008 7:30AM
Prepayment risk?????
Have you met someone saying , gee i think this foreclosed house down the road looks great value, i better prepay now and buy this baby!!! dont be silly
Posted by guest , Aug 15, 2008 8:00AM
@13 - if you don't know what pre-payment risk is, you probably shouldn't comment on it. It makes you sound stupid....
That being said, given the lack of availability of mortgage finance these days pre-payments do seem unlikely.
And I think he means Trillion, not Billion too.
Posted by guest , Mar 28, 2009 9:34AM
$4.5 billion is 1 trade?? oh, wish i never knew that too.
http://www.reversemortgagepage.com/