Agency Update

March 5, 2018

Agency yields were mixed on the week with modest increases on shorter-term maturities and small declines for longer-term maturities, resulting in a slightly flatter curve.  For the week, two-year Agency yields moved higher by 1 bp to 2.28%, the 5-year Agency yield improved 2 bps to 2.70%, and yields on 10-year Agencies fell 1 bp to 3.16%.

Yield spreads for Agency bullets compared to Treasuries widened by 1 to 2 bps, while yield spreads on callables to Treasuries were mixed.  Spreads widened 5 to 10 bps for 3-year finals, but tightened 5 bps on 15-year structures.  As seen below, callable structures with 3-year finals compare favorably to bullets because of the enhanced relative value on a yield spread basis (see graph below).




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

Issuer Issued Called
Federal Farm Credit Banks      395,000,000                                      –
Federal Home Loan Banks      529,500,000                                      –
Federal Home Loan Mortgage Corp   1,280,000,000                                      –
Federal National Mortgage Association                       –                                      –
Federal Agricultural Mortgage Corp                       –                                      –
Total   2,204,500,000                                      –



On Tuesday, Fannie Mae skipped its benchmark note issuance slot.  It passed on its benchmark note supply slot on January 24th after pricing a $2B five-year benchmark note on January 19th.  The highlight of the agency coupon calendar in the upcoming week will be Freddie Mac’s announcement tomorrow of any plans to sell reference notes.


Notable agency 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