Corepuncher
TSP Pro
- Reaction score
- 40
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That was a very hot number.
Hey Core, why 1240? I'm still looking for 1214-1225 for my entry.
Here's part of it:I don't claim to understand how all this stuff works with the rates, but I know this graph is significant. From www.markit.com. They showed a longer version of this on CNBC earlier today...and this current spread level we are at, is MUCH HIGHER than that of the panic lows in March. This graph below is for AAA rated credit, and as I understand it is the % they pay ABOVE the treasury rate.
Notice the huge spikes...and that happened over the weekend I believe. What changed? A simple article from Barrons? No...they just said what everyone already knew. Increasingly, I believe the "big boys", those supposedly "in the know", are running around like chickens with their heads cut off. We are in unprecedented times.
and here's more, housing numbers out today were bad:Freddie Sells $3 Billion in Debt at Higher Spreads (Update3)
By Jody Shenn
Aug. 19 (Bloomberg) -- Freddie Mac, the second-largest U.S. mortgage-finance company, sold $3 billion of five-year reference notes at its highest yields over benchmarks in at least 10 years as demand fell from Asian investors and central banks.
The debt priced to yield 4.172 percent, or 113 basis points more than U.S. Treasuries of similar maturity, Freddie said in a statement today. The McLean, Virginia-based company sold five- year notes in May at a spread of 69 basis points. A basis point is 0.01 percentage point.
Freddie's funding costs have risen as higher mortgage delinquencies caused some analysts and investors to question whether the company needs more capital to remain solvent. Asian investors are scaling back purchases the most, failing to find comfort in U.S. Treasury Secretary Henry Paulson's commitment to rescue Freddie and larger competitor Fannie Mae, which have posted almost $15 billion in net losses in the past year. [more... http://www.bloomberg.com/apps/news?pid=20601009&sid=aAwQe_lzFOLU&refer=bond ]
Both articles give a pretty clear picture of what's driving it now. Check the links for the whole story.Fannie, Freddie Bailout May Hinge on $223 Billion Debt Rollover
By Dawn Kopecki
Aug. 20 (Bloomberg) -- Fannie Mae and Freddie Mac's success in repaying $223 billion of bonds due by the end of the quarter may determine whether they can avoid a federal bailout.
Fannie, based in Washington, has about $120 billion of debt maturing through Sept. 30, while McLean, Virginia-based Freddie has $103 billion, according to figures provided by the government-chartered companies and data compiled by Bloomberg.
Rising borrowing costs and evidence that demand for their debt was waning last month led Treasury Secretary Henry Paulson to seek the authority to pump unlimited amounts of capital in Fannie and Freddie in an emergency. Their interest costs are again increasing amid concern that concern that credit losses are depleting the capital of the beleaguered mortgage-finance companies.
Rolling over the debt ``is the single most important factor to their ability to remain liquid,'' said Moshe Orenbuch, an analyst at Credit Suisse in New York. ``So far, they've been able to do that.''
Investors in Asia, the biggest foreign owner of Fannie's $3 trillion of bonds, are reducing their share of purchases, potentially increasing the need for Paulson to make good on his pledge to backstop the companies.
``This whole backstop mechanism was set up so the actual need for it could be avoided,'' said Mahesh Swaminathan, a mortgage strategist for Credit Suisse in New York. ``The market is testing the Treasury's resolve.'' ....
Initial optimism that Paulson's proposal would bolster confidence in the companies has vanished on concern that the deteriorating housing market may force a bailout, a move that would likely wipe out common shareholders and potentially some preferred stockholders, Miller said.
``It hasn't restored any faith, it just highlighted their problems,'' Miller said. ``The market has come to accept the fact that the government has got to do something.'' [more...]
http://www.bloomberg.com/apps/news?pid=20601087&sid=azlybEsIURmA&refer=home#
Asians and other investors fleeing fanny/freddie into bonds.Potential bearish flag setting up. Today was essentially a sideways day. Tech was weak despite good numbers from HPQ. I thought tech was leading. Oil showed resilience despite a huge build in crude. Could get back into the 120's soon. Money went into bonds today. That is a strong statement when you take into account inflation is high...I guess the balance of risk lies with economic weakness.
Bear flag would bring us down to 1240, near the lower Bollinger band. If we touch it, look out. Might take a while, which is good for us sitting in G with no IFT's!
On a lighter note, 3rd wedding anniversary today.![]()
3rd wedding anniversary today.![]()
There is solace in G. Come join us.
Updated Tracker COB 8/21/08
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2008 YTD Return: +8.85%
Today: +0.01%
Current Allocation: 100G
Tracker Rank: 2
Tentative Next Move: Wait for < 1240 to buy after 9/1/08
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