How Will Foreigners React to Fannie Mae’s Problems?
Because of Fannie Mae’s recent accounting problems, they may be forced to slow the growth of their mortgage portfolio. This would mean they would be issuing fewer agency securities and, in turn, would push agency spreads tighter. While this argument seems to make sense at first glance, it is only taking into account half of the law of supply and demand. Demand would have to remain constant in order for lower supply to drive agency spreads tighter.
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Market Facts — September 29, 2004
How Will Foreigners React to Fannie Mae’s Problems? Because of Fannie Mae’s recent accounting problems, they may be forced to slow the growth of their mortgage portfolio. This would mean they would be issuing fewer agency securities and, in turn, would push agency spreads tighter. While this argument seems to make sense at first glance,… Continue reading Untitled