Agency Update

November 26, 2018

The Treasury curve continued its recent flattening trend during the holiday-shortened week.  Agency bullets mostly moved in line with Treasuries.  Agency bullets with 2-year maturities cheapened by 1 basis point and now yield 2.86%.  Bullets with 3-year maturities were unchanged at 2.92%, and 5-year maturity yields declined 1 basis point to 2.98%.

Agency bullet and callable spreads versus Treasuries were largely unchanged on the week.  Less-structured callable yields remain near the highest levels of the year but have richened up with the overall rally in Treasuries over the past couple of weeks.  Fixed-rate step-ups have widened out as dealers have looked to shed risk going into year-end, so there are relatively attractive offers available in the market.

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

Last Monday, November 19th, Fannie Mae passed on its Benchmark issuance date.  This Tuesday, November 27th, is the next issuance date for Freddie Mac.  Next Monday the 3rd is the upcoming announcement date for the Federal Home Loan Bank to issue Global securities.

Daniel Anderson

Senior Vice President

Vining Sparks

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