Agency Vigilantes In Rampage Mode

by economy on 06/08/09 at 9:08 am

While the short squeeze manipulators and stock borrow pullers try to kill any and every last bear out there, the much bigger problem of mortgage yields is starting to get out of control again: the last two days have seen the widest spreads on 30 Year Current Coupon FNMA in almost two months.

Instead of trying to squeeze out those who correctly grasp that AIG and CIT are worth nothing at best, and the only benefits accrue to government and pension fund longs (who incidentally can not sell by investment procedure) maybe the powers that be should focus on a concerted implosion in equities to get the stampeding masses into bonds and MBS again, especially with $75 billion in auctions comping up in the next two weeks. Because unless agencies are put in their place, the propaganda machine be unable to say that a record number of mortgages was started in July and August. Furthermore, as any day now it seems Fannie and Freddie will implode after Lockhart’s sudden departure, look for some very interesting fireworks in the agency space soon.

While the agency space soon.

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