Agency Update

March 27, 2017



Weekly Comments

Agency yields declined across the curve for the second consecutive week.  Two-year Agency yields moved lower by 7 bps to 1.33%, 5-year Agency yields decreased 10 bps to 2.04%, and yields on 10-year Agencies declined 12 bps to 2.80%.

Yield spreads for Agency bullets to Treasures were unchanged for the week.  After tightening for several weeks, yield spreads for callable Agencies widened by 5 to 15 bps.  As seen below, spreads on callable structures are now trading at levels seen one month ago, and many structures offer favorable relative value to bullets on a spread basis.

 

 

Michael S. Erhardt, CPA

Senior Vice President

Investment Strategist

Vining Sparks, IBG

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