Comments on: Buy Agency Mortgage Bonds http://alephblog.com/2008/07/18/buy-agency-mortgage-bonds/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Thu, 18 Mar 2010 05:20:57 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: David Merkel http://alephblog.com/2008/07/18/buy-agency-mortgage-bonds/comment-page-1/#comment-18056 David Merkel Sun, 20 Jul 2008 03:22:22 +0000 http://alephblog.com/?p=776#comment-18056 If agency mortgage bonds are illiquid, then that's a huge portion of the bond market that is off limits. I don't think illiquidity can happen to agency mortgage bonds, absent a failure of Fannie and Freddie, where senior obligations are no longer whole. The agencies are valuable to the US government. They want to keep them around, if for no other reason than to prevent systemic risk. If agency mortgage bonds are illiquid, then that’s a huge portion of the bond market that is off limits. I don’t think illiquidity can happen to agency mortgage bonds, absent a failure of Fannie and Freddie, where senior obligations are no longer whole.

The agencies are valuable to the US government. They want to keep them around, if for no other reason than to prevent systemic risk.

]]> By: synchro http://alephblog.com/2008/07/18/buy-agency-mortgage-bonds/comment-page-1/#comment-18055 synchro Sun, 20 Jul 2008 02:25:11 +0000 http://alephblog.com/?p=776#comment-18055 Weirder things have happened. I think the yield blows out for a reason: the illiquidity is now spreading to agency mortgage-backed securities. Before one buys these securities, one needs to ask how marketable they will be. Weirder things have happened. I think the yield blows out for a reason: the illiquidity is now spreading to agency mortgage-backed securities. Before one buys these securities, one needs to ask how marketable they will be.

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