No love for Fannie...
Well, I think its clear by todays 180 point selloff that Fannie and Freddie may not be the
most desireable pieces of "paper" to hold. The auction did not go so well and the market
didn't like that. What it means is that investors want more return for their risk/higher rates.
Something thats been said here a number of times. Junk always demands higher interest,
because the risk is higher. The risk on US assets right now, and particularly real estate related
assets is extreme. Its no longer a throw anything at the wall/no doc real estate can only go up
environment, and that delusion may not come back for some time.... maybe a decade or more
Short initiated in CME group