Agency spreads move out 2-3 bps; Greece's debt woes spark rise in Treasuries; Fannie takes hit

By Lisa Kerner

Charlotte, N.C., June 16 - Agencies tracked swaps on Thursday, which once again blew out early, leaving the agency curve wider by 2 basis points to 3 bps on the day, according to a trader.

"I saw a lot more selling than buying today," the trader said, noting that he believes the Street is seeing the same on rising Treasuries.

He attributed the sell-off and climbing Treasuries to the turmoil in Greece. There are fears that the country's banking system could collapse if Greece cannot restructure its debt, affecting Europe's banking system and its currency.

Wednesday's $3 billion issue of two-year Benchmark Notes from Fannie Mae also took a hit, according to the trader, who cited bad timing amid world events.

Fannie Mae priced the notes at 17 bps over Treasuries. On Thursday, they opened at 20 bps and closed at 19.5 bps, said the trader.

Price talk for the notes, which were sold mainly in the United States, initially was at a spread of 15 bps over Treasuries.

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