UPDATE 1-U.S. bond futures tumble after takeover of GSEs
September 8th, 2008 | by admin |* T-bond futures tumble after U.S. takeover of GSEs
* Heightened credit risk wipes out last week’s gains
* Rate futures hit, imply Fed hike by end-1st qtr 2009 (Updates market actions, adds quote)
By Richard Leong
NEW YORK, Sept 7 (Reuters) - U.S. Treasury bond futuresfell sharply late Sunday, kicking off the week’s trading afterthe government took over struggling mortgage finance giantsFannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) in what could be thebiggest U.S. bailout ever.
The move, announced on Sunday, triggered a massive rally instock index futures, curbing safe-haven bids for bonds.
Moreover, the takeover is seen likely to mean moregovernment borrowing and federal exposure to risky mortgageassets which have been battered by the housing slump.
The U.S. Treasury said it will immediately take $1 billionequity stakes in each of the two government-sponsored butshareholder-owned enterprises.
The government’s ownership could grow as much as $100billion each and would be senior to both existing preferred andcommon shares. For more see [ID:nN07479172].
