As Ginnie Mae mortgage-backed securities reached an all time high in reaction to a GSE reform bill currently working its way through the House Banking Committee, investors have begun to believe the bill will not make it out of committee this year, and began to rapidly sell Ginnie Maes.

"In fact, for June delivery, Ginnie 7.5s were up nine ticks, and Fannie 7.5s were up 17.5 ticks, so Ginnies 7.5s had a quarter point underperformance, and Ginnie 8s had 6.5 ticks underperformance," said Art Frank, head of mortgage research at Nomura Securities, calling the event a "pretty dramatic cheapening of Ginnies."

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