Agency Update

April 26, 2021

Treasury yields drifted lower in what was a relatively quiet week in the bond market.  The 5- and 10-year notes declined by 2 basis points on the week to 0.82% and 1.56%, respectively, while the front end of the curve moved lower by about a basis point.  Agency bullets spreads were mostly unchanged while callables widened.  This week’s economic calendar is full of market-moving data releases, but the highlight of the week comes Wednesday when the FOMC’s April meeting concludes.  The market is still looking for clues as to whether the improvement on the pandemic front and in the economic data will have changed the Fed’s collective thinking regarding timing on tightening policy.  Investors expecting some guidance on taper timing will likely be left disappointed.

Agency bullets remain at extremely tight spreads but the Vining Sparks trade desk saw bullets move almost imperceptibly wider last week.  Despite moving ever so slightly wider, bullets are still trading basically on top of Treasurys on the front end of the curve and at the slimmest of spreads on the longer end.  Because of that, the Vining trade desk continues to move Treasury paper to would-be bullet buyers.  Agency callables widened on the week, only marginally for intermediate tenors but by several basis points on the longer end.  Most of the agency purchases last week occurred in 3- to 7-year paper, where the curve is at its steepest.

The following table reflects last week’s total issuance and call activity across the primary GSE issuers.  Total issuance increased to $3.8 billion and total call volume increased to $3.9 billion.  For specific call dates and amounts for individual bond portfolios, be sure to log in to the Client Portal on the Vining Sparks website.

Last week Freddie Mac passed on its Reference note.  This week Fannie Mae has an issuance slot on Tuesday, April 27th, followed by another Benchmark date next Tuesday, May 4th.

Daniel Anderson

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120