Agency Update

January 16, 2018

For the second consecutive week, Agency yields rose, moving in lock-step with the increase in Treasury yields.  U.S. Treasury yields were lifted by market expectations for higher supply due to fiscal expansion, the Fed’s balance sheet normalization plans given the step-up in reduced investments for this month, reports of lower demand from China, and firm economic data.  On the week, two-year Agency yields increased 4 bps to 2.03%, 5-year Agency yields improved 6 bps to 2.41%, and yields on 10-year Agencies were higher by 7 bps to 2.90%.

For the second consecutive week, yield spreads for Agency bullets compared to Treasuries were unchanged.  Spreads for callable Agencies tightened 2 bps on the short end of the curve (2- and 3-year finals) and 4 to 7 bps on maturities of 5 years and greater.  In the near term, we expect agency note spreads to trade in recent ranges, although 3- and 5-year spreads could widen slightly in the week ahead.

The following table reflects last week’s total issuance and call activity across GSE issuers:


Issuer Issued Called
Federal Farm Credit Banks      295,000,000                                      –
Federal Home Loan Banks      220,500,000                                      –
Federal Home Loan Mortgage Corp      173,000,000                                      –
Federal National Mortgage Association                       –                                      –
Federal Agricultural Mortgage Corp        33,000,000                                      –
Total      721,500,000                                      –


Freddie Mac forewent issuing reference notes on its January 10th announcement date and today.  The highlight of the agency coupon calendar in the upcoming week will be Fannie Mae’s announcement on Thursday of any plans to sell benchmark notes.


Notable activity last week included:




Ricky Brillard, CPA


Vining Sparks, IBG

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