Wall Street Journal (02/26/08) P. C2; Ng, Serena
UBS Investment Research reports a 2.42-percentage-point spread between the yield on "current coupon" bonds backed by 30-year fixed mortgages and the yields on five- and 10-year Treasury bonds on Feb. 22, marking a 22-year high. These fixed-rate agency mortgage-backed bonds, until recently, were deemed safe for debt investors. Analysts attribute the widening spread to the large supply of mortgage debt, the failure of banks and government-sponsored enterprises to purchase these securities as a market backstop and a drop in demand among both local and foreign money managers.
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