10-Year Yield Hits Record Low, But...

The rate-indicative benchmark 10-year Treasury yield hit record lows of around 3.2% before noon Tuesday, but bond market participants were saying they believed the debt markets would ultimately shrug off the flight-to-quality prompted by Freddie Mac's audit-related management shake-up.As of about 9:50 a.m. Tuesday, agency debt spreads to Treasuries had in total widened out about five or six basis points from where they stood before Freddie's initial announcement early Monday, according to Scott Graham, managing director and co-head of the agency group at Greenwich Capital. However, Mr. Graham told MortgageWire he believed that announcements by two rating agencies late Monday indicating that they had put certain ratings of Freddie Mac or its securities on watch for possible downgrade, as well as concerns expressed by a politician who has been a longtime critic of the government-sponsored enterprises, had not done much to further hurt spreads, which were at the tightest levels in six years prior to June 9. He said the fact that Freddie Mac's problems have come to light and that the GSE is correcting them should be good for agency spreads in the long term.