Mortgage bonds slump in U.S. as policy concern trump analysis

Government-backed mortgage bonds are poised to underperform Treasuries this month by the most since the height of the global financial crisis, roiled by speculation about potential public policy changes and a wave of home refinancings spurred by record-low interest rates. Securities guaranteed by government-supported Fannie Mae, Freddie Mac or federal agency Ginnie Mae returned 54 basis points, or 0.54 percentage point, less than U.S. debt this month, Barclays Capital index data show. It’s the worst relative performance since November 2008. The $5.4 trillion market is being challenged by speculation the Federal Reserve may boost Treasury purchases and the U.S. may loosen Fannie Mae and Freddie Mac refinancing standards, Eugene Flood, chief executive officer of Smith Breeden Associates Inc., said Sept. 28 at Bloomberg News headquarters in New York. The Obama administration and lawmakers are also drawing attention to the companies’ undecided futures, he said.

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please