Mortgage-Backed Market Awaits Hints from Greenspan
Brockman, Joshua, American Banker
Trading in mortgage backed securities was light last week as investors waited Federal Reserve Chairman Alan Greenspan's testimony to Congress, which starts today.
"It has been very quiet this whole week," said one trader, who was looking forward to the government's auction of two- and five-year notes and waiting to see if he could detect any bearish or bullish gesture in Mr. Greenspan's testimony.
"Every time he speaks the markets are extremely volatile," the trader said.
But subdued trading may continue beyond Mr. Greenspan's testimony. Inna Koren, first vice president for fixed-income research at Prudential Securities, said investors will be looking for prepayment data from Freddie Mac, Fannie Mae, and Ginnie Mae.
A wide range of prepayment projections have been floating around Wall Street, Ms. Koren said.
"People are anxiously waiting for the next prepayment release to confirm or deny their prepayment projections, and that might have significant impact on spreads in general," she said. "Any prepayment surprises in the data might create further volatility in mortgage spreads."
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The single-family residential mortgage market is "waiting for two things-a direction of interest rates and the actual level of prepayments," said Craig S. …