Pass-Throughs Fall 9/32, Outperforming Treasurys
May 09, 2011
Traders said the pass-through market began the day weak because of a burst of selling by mortgage bankers. A pass-through is a security made up of a pool of debt instruments, with the income from the debt passed through an intermediary -- usually a government agency or investment bank -- to the investors. However, the tone firmed later in the session, and mortgage-backeds held their ground better than Treasurys, though both markets were hit by fears the Federal Reserve could be moving toward an interest rate increase. Thirty-year conventional pass-throughs were down 9/32, compared to a loss of 3/8 for the 10-year Treasury. Government National Mortgage Association securities lost 10/32. In adjustable-rate mortgages, a bid list traded Monday made up of $82 million face value of convertible Federal Home Loan Mortgage Corp. pools with a 10.3% cap and a current value of $39 million, $18 million face value of Ginnie Mae pools with a 7% initial rate and 11% lifetime cap, and $34 million face value of Ginnie Mae pools with a 7 1/4% initial rate and 10 1/2% lifetime cap.
