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August 10, 2010 Tuesday 2:37 PM EST
LENGTH: 124 words
HEADLINE: Mortgage debt spreads tighten minimally after Fed
BYLINE: Deborah Levine
NEW YORK (MarketWatch) — The gap between yields on mortgage-backed securities and Treasurys got slightly smaller after the U.S. Federal Reserve said it will reinvest proceeds from maturing mortgage debt back into the Treasury market instead of reducing its balance sheet. The move was anticipated by many analysts, who have also noted a tight spread between MBS and benchmark Treasury bonds for some time now. The yield on Fannie Mae’s (fnma) 30-year mortgage-backed securities traded at a spread of 39 basis points over Treasurys (ust5yr) after the Fed’s decision, compared to 41 basis points earlier in the session.
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