Hot sectors in a tepid recovery
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TREASURIES-Longer debt adds loss on mortgage-related sales
NEW YORK, Aug 6 (Reuters) - U.S. long-dated Treasury debt prices extended earlier losses on Wednesday as investors stepped up unwinding of hedges on mortgage securities after Freddie Mac unveiled steps to boost capital.
Investors often buy and sell Treasuries and interest rate swaps to hedge against changing values on mortgage bonds.
Freddie Mac (FRE.N), the No. 2 U.S. mortgage finance company, plans to keep its mortgage portfolio "roughly flat" until market conditions improve, said the company's chief financial officer Buddy Piszel. For more See [ID:nN06421421].
Concerns about the lack of buying support from Freddie Mac led traders to unload mortgage-backed securities and related Treasury hedges, analysts said.
Meanwhile, traders were also selling longer-dated Treasuries to make room for $17 billion of new 10-year notes to be auctioned by the Treasury Department, they said.
The price on benchmark 10-year Treasuries was down 13/32 at 98-12/32. Their yield US10YT=RR, which moves inversely to the price, was 4.08 percent, up from 4.02 percent late Tuesday. (Reporting by Richard Leong; Editing by James Dalgleish)
