MBS and Swaps
April 7th, 2009 2:32 pm | by John Jansen |Swaps are wider across the curve this day. The two year spread widened 1/4 basis point to 59 3/4. The 5 year spread widened 2 basis points to 59 3/4 basis points. The 7 year spread has leaked wider by 2 1/4 basis points to 32 1/4. The ten year spread is 1 basis point wider at 22. The 30 year spread is 1 3/4 basis points wider at NEGATIVE 23 3/4.
Why are spreads wider today ? An eclectic group of clients was busy paying in anticipation of the Treasury issuance causing additional yield increases. It would appear that for now the latest crater at Broad and Wall has increased the sex appeal of stodgy Treasuries.
Mortgages are about 7 ticks tighter versus swaps. The Federal Reserve has been a buyer of 4s and 4 1/2s.
One dealer notes that some fast money trading accounts had the temerity and fortitude to short the premium coupons but those sales did little to alleviate the strong performance of the issues.
