Replies to post #612154 on Fannie Mae-No Politics (FNMA)

[kthomp19]

do you have any thoughts on why the spread between FNMA and FMCC might be narrowing?

No, I have no idea. The FNMA:FMCC ratio flucuates over time, and last dipped below 1 on January 17 2019 from my data.

I can't begin to guess why the market sometimes values FNMA at a 10% premium to FMCC and sometimes values them equally. I certainly don't see a way to predict what will happen in the future based on this.

If one was so inclined, one could look at a chart of FNMA:FMCC and try to position oneself accordingly. In this case, selling FMCC to buy FNMA would be prudent if one assumes that the ratio will revert to historical averages, which is FNMA trading at a ~6% premium to FMCC.