| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Banks `Throw in Towel' to Add Most Mortgage Bonds in 18 Months |
Bloomberg.com - Aug. 3, 2010 - By Jody Shenn
The biggest banks are adding government-backed mortgage bonds at the fastest pace in 18 months, breaking with an unusual pattern in which they shunned the debt as their loan portfolios shrank during the economic slump, according to Barclays Capital.
Large U.S. commercial banks added $51.4 billion of so- called agency mortgage-backed securities in the two weeks ended July 21, according to the latest data released by the Federal Reserve. The holdings fell from $696.6 billion in the middle of 2009 to $687.2 billion on July 7 even as the lenders’ portfolios of Treasuries and agency corporate debt grew $104 billion.
Large banks, which now hold $736.8 billion of the securities, avoided the debt as the Fed’s $1.25 trillion of buying drove down yield premiums to record lows relative to 10- year Treasuries, and acquisitions by private investors then restrained spreads.
The increased likelihood the Fed will hold its benchmark for short-term rates at record lows for longer as the economy struggles and that spreads will stay tight amid limited supply have pushed “some banks to throw in the towel on the waiting game,” Barclays analyst Derek Chen wrote yesterday in a report.
“The tipping point has been the growing conviction that rates are not heading higher and mortgages are not heading wider anytime soon,” Chen, who is based in New York, said today in a telephone interview. “They’re not going to find a better opportunity. The longer they wait, the more money they are wasting” on holdings of cash or lower-yielding assets.
Price, Yield
Nomura Holdings Inc. mortgage-bond strategists wrote today in a report that the mortgage-bond figure shouldn’t be taken to be a definitive sign of “a real uptick in bank demand.”
Buyers from outside the U.S. have been flocking to the market for months, according to separate data from the Fed and Treasury Department. The amount of agency mortgage bonds and agency debt held at the Fed for foreign central banks, sovereign wealth funds and other official investors has risen by $70 billion to $830 billion on July 28, from a more-than-two-year low in November, its data show.
The average price of the $5.2 trillion of mortgage bonds guaranteed by government-supported Fannie Mae and Freddie Mac or federal agency Ginnie Mae climbed to a record 106.9 cents on the dollar yesterday, up from 106.2 cents on June 30, according to Bank of America Merrill Lynch’s Mortgage Master Index.
Fannie Mae Yield
Fannie Mae’s current-coupon notes, or those trading closest to face value, yield 3.54 percent as of 5 p.m. in New York, according to data compiled by Bloomberg. That’s 0.64 percentage point more than 10-year Treasuries, up from a record low of 0.54 percentage point reached July 30, Bloomberg data show.
Checking accounts, among the means through which banks raise money that they can invest in securities, pay depositors 0.53 percent on average, according to Bankrate.com data. Rates on the accounts typically vary based in part on the Fed’s target rates. A rise in banks’ deposits, which Fed data show growing for large banks by $37 billion from April 21, has contributed to their desire to invest more in mortgage securities, Chen wrote.
While the Fed data on banks’ mortgage-bond portfolios “tend to be volatile, the magnitude of the increase seems too big to be dismissed as noise,” Chen said in his report. If banks are back in the market, they have “potential to absorb” more than $150 billion more of the securities, which would “bode very well” for spreads, he wrote.
For the complete article visit Bloomberg.com
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