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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: gregor_us who wrote (63824)6/15/2006 6:35:32 PM
From: russwinter  Read Replies (4) of 110194
 
We already know FCBs have gone hog wild over agencies (own $509 billion worth per latest custodial report frm Fed), but now it appears they are moving even further down the food chain. Massively distorting behavior, just supports more Ponzi units. The spread between five year housing agencies, and six month T-bills is only 28 basis points.
today.reuters.com

Central banks are planning to diversify foreign exchange reserves away from U.S. government debt into higher-yielding assets, including mortgage bonds, through 2007, according to a UBS Securities survey. Almost all of the 90 central banks polled by the unit of the world's biggest wealth manager now have the authority to spend reserves on bonds other than Treasury debt, the poll found. Just 3 percent said they only invest in Treasuries, down from 31 percent four years ago, it said.

Sixty-one percent said they plan to purchase more bonds with higher yields, led by mortgage- and other asset-backed securities, and so-called agency debt of government-sponsored enterprises such as Fannie Mae (FNM.N: Quote, Profile, Research) the recent poll said. The survey's results "suggest that central banks are moving more aggressively into spread product."
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