Price Performance Comparison
 
 
 
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Let’s take a retrospective look at the similarities and differences between two charts, one showing the 10-Year Treasury note and the other the Fannie Mae 30-Year 6.0% Bond.  The first chart shows the past performance of the 10-Year Treasury note and the second chart shows the corresponding monthly performance of the Fannie Mae 30-Year 6.0% Bond (FNMA).  One similarity that sticks out is the overall upward trend in both charts.  One of the differences is the daily volatility characterized by the length of the daily candlesticks – the 10-Year Treasury note tends to be more volatile than the Fannie Mae 30-Year 6.0% Bond.

US 10-yr Note

FNMA 6.0% Mortgage Bond

It is interesting to note that both charts have an overall upward trend for the month studied.  I do agree they will have similar trends. However, this comparison between the charts shows quite a daily variance.  The two charts really do not look very similar at all, especially once you look at the trend lines (the yellow lines).  Using the FNMA chart does provide a definite advantage in giving your customer the correct information.  My contention is you need every edge you can get to provide a pricing advantage for your business and your clients.  By using the FNMA bond to guide in decision making over the use of the 10-year Treasury note, you will have a decided edge over those who only use the 10-year Treasury note as a pricing guide. The net effect will be increased market awareness on your part and the perception of increased market expertise in the eyes of your clients.

10-Year Treasury and FNMA 6.0% Plotted Together
   
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