Agency spreads tighten, five-years gain 5 bps; Treasuries to see heavy supply

By Lisa Kerner

Charlotte, N.C., March 23 - Agency spreads were tighter on the day, with the five-year sector in by 5 basis points, a trader said.

The shorter sectors were in 3 to 4 bps, while the longer sectors were in by 4 to 5 bps, said the trader. No reason was given for the tighter spreads on Monday.

In other agency news, Citigroup announced Monday it will price medium-term senior notes backed by the Federal Deposit Insurance Corp.

When asked if the news had any impact on market sentiment, a source simply said: "It's the cheapest way for them to raise money."

The same source was looking ahead to the bond markets seeing "a lot of supply coming out" as the result of three Treasury auctions scheduled for this week.

On Tuesday, the Treasury will auction $40 billion of two-year notes, followed by an auction of $34 billion of five-year notes on Wednesday and $24 billion of seven-year notes on Thursday.

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