'ECB selling US agencies, market whipsawed' (from 7-18-03)

[Petrodollar Warfare]

Well, this is rather unusal and does not look good for the US housing bubble....what would happen of Fannie Mae popped?


E'CB selling US agencies, market whipsawed--sources'
Friday July 18, 4:03 pm ET
By Nancy Leinfuss

NEW YORK, July 18 (Reuters) - The European Central Bank and or some of its member national central banks were selling U.S. agency debt on Friday, market sources said, forcing yield spreads to widen significantly in an already jittery market, traders said.

Spreads later improved as investor buying kicked in, traders said.

"This morning we have indeed seen selling by ECB banks," the trader said, noting sales totaled "several hundred million dollars." He added that the flows were "definitely higher than usual," and that (there was also some buying of agencies by domestic accounts.

The ECB selling added to the accounting- and regulation-related woes of U.S. agencies Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) that have rocked the agency market for the last several weeks.

Rumors that the ECB may encourage its member banks to limit their holdings of Fannie Mae (NYSE:FNM - News) or Freddie Mac (NYSE:FRE - News) debt and may be looking to unload some its own supply of U.S. agency debt ran rampant through the market, traders said.

(more)
http://biz.yahoo.com/rf/030718/markets_agencies_2.html

[On the Road]

1. My Upcoming Mortgage Just Jumped 1/8%

at about the same time, before I could lock it in. Now matter what the Fed does, long-term rates can still go up if the outlook is not good.