One of the upsides to the government bailing out Fannie/Freddie will be lower rates for the fixed-rate mortgages. As the government buys mortgage backed securities, the yield will drop and thus rates will drop. Treasuries will suffer as the money pours into MBS.
This is being reflected this morning and rates should drop dramatically....
From marketwatch...
Washington takes over Fannie Mae, Freddie Mac
Stock markets rally on U.S. Treasury move
| By Greg Robb & Steve Gelsi, MarketWatch |
| Last Update: 8:23 AM ET 9/8/08 |
WASHINGTON (MarketWatch) - U.S. Treasury Secretary Hank Paulson on Monday said the government's takeover of Fannie Mae and Freddie Mac was necessary, but it was "not something I wanted to do."
Meanwhile, the biggest potential government bailout of a generation sparked rallies in Europe and Asia, with indications of a strong open in the U.S. See full story.
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