The Federal Reserve has had a tremendous influence on the agency mortgage market over the past year. For example, it owns a significant portion in lower coupons and in conventionals — especially FNMAs, and just a small amount of GNMAs (9.1% of their portfolio).
In terms of spreads, Libor OASs are near their historical tights, FTN Financial analysts said. However, they have recently bounced off their lows. They added that this analysis showed that GNSF is cheap to FNCL and FNCI is cheap to GNSF.