March 27, 2017
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
Vining Sparks, IBG