bonds-still-jam-the-pipeline-as-volatility-continues

Bonds still jam the pipeline as volatility continues

Moves to lift restrictions on US government-sponsored loan agencies may help to stabilise the market, but some are forecasting more troubles ahead for creditors.
The announcement that Fannie Mae, the largest source of funding for US home loans, and its smaller rival Freddie Mac, may be allowed to expand their mortgage portfolios helped Asian bond spreads to tighten early yesterday.

Spreads also moved in on the back of higher global equities, with the benchmark Hang Seng index opening 1.07% higher at 21,973.58 at the beginning of trade yesterday.

Portfolio restrictions were imposed on both Fannie Mae and Freddie Mac in 2006, following accounting irregularities. Should these restrictions be lifted, the government-sponsored enterprises would be in a position to buy more loans, and thus boost demand for mortgages, helping to ease the crunch in the US credit markets.

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