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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (311)	10/3/1998 7:56:00 PM
From: Sam	Read Replies (1) \| Respond to of 2794

So, to translate to make sure I understand what you're saying, the spread between GMNAs (and mortgage rates generally, I take it) and the 30 yr bond is wider than historically normal because of Japanese buying of the 30 yr, and it would require too much cash/margin for those trying to play the spread to tighten to get it back to where it normally is. Therefore those who bet on the spread narrowing are taking a bath (Lehman, I take it, being one of them, and they just threw in the towel if the report of them buying bonds and selling mortgage backed bonds is true). Is that a fair assessment of your view? So does this mean that the spread will widen as others throw in the towel on this trade? What does this mean for mortgage rates? That they will go up as people sell their GMNAs? Or is the spread wide enough already, and already reflects this trap? Finally, what is OPM?