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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: gregor_us who wrote (1255)3/5/2004 10:30:16 AM
From: mishedlo   of 116555
 
From John Succo on GSE's and Treasuries

Remember that the GSE's abhor moves like this in bonds. They are short gamma in bonds because as rates move down they risk losing assets (against their liabilities) as people pre-pay mortgages.

I would guess they are sitting there right now deciding whether they should buy bonds up here or wait for a pullback. Either way, the higher the volatility in the bond market, the higher their costs.
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