Fannie, Freddie bond, MBS yield spreads narrow

NEW YORK Mon Jul 14, 2008 12:42pm EDT

NEW YORK (Reuters) - Fannie Mae and Freddie Mac "federal agency" debt and mortgage-backed securities gained relative to U.S. government bonds on Monday after the Treasury and Federal Reserve announced plans to boost investor confidence in the companies.

Yield spread premiums on five-year unsecured debt of Fannie Mae, the largest provider of funding for U.S. residential mortgages, narrowed 6 basis points to about 74 basis points over Treasuries, according to GovPX/Garban-ICAP.

Agency and mortgage-backed securities outperformed interest-rate swaps.

Two-year swap spreads were quoted at 86.50 basis points, 1.25 basis points narrower than Friday. Ten-year swap spreads were 66.75 basis points, tighter by 1.75 basis points.

(Reporting by Al Yoon and Richard Leong; Editing by Tom Hals)

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