During the second quarter of 2004, prices of bonds of U.S. government agencies and government sponsored enterprises fell, indicating that the main motivated sellers were the agencies and GSEs (as issuers) and their related mortgage pools. The motivation of issuers of agency bonds was to raise funds to meet demand for mortgages from households that was […]

Since the price of Treasury bonds fell during the second quarter of 2004, we can infer that the principal sellers (the U.S. Treasury and Broker-Dealers) were more motivated than the principal buyers (Foreign Investors and Households). Broker-dealers were selling Treasuries in order to unwind earlier repurchase deals (positions in Treasury bonds financed by borrowed money). The […]