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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Ken98 who wrote (112085)	7/11/2001 3:01:42 PM
From: John Pitera	Read Replies (1) of 436258

a note on what securities the FED uses for RP's and reverse RP's ------------- 13:21 ET 30-year: -8/32..5.687%....GNMAs: -4/32....$-¥: 124.36 Just learned something interesting from a report we have gotten our hands on. When the Federal Reserve takes part in RPs or reverse RPs to temporarily add or drain reserves from the banking system, they use Treasuries, Agencies and Mortgages. Now to go a bit deeper, FNMAs and FHLMCs are the only Mortgages used for this endeavor. The reason behind this is apparently GNMAs do not settle through the district Fed branches, and are not wireable. However, they will gain this ability in November. Some say that this is behind some of the higher prices in GNMA paper as investors like the idea of holding an asset that can be used in RP operations.

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