Late night News: Dec. 28

• 1) Fannie mortgage holdings sink, delinquencies leap

“NEW YORK (Reuters) - Fannie Mae’s gross mortgage portfolio shrank sharply in November while the delinquency rate on single-family loans it guarantees leaped in October, the government-controlled U.S. home funding company said on Monday.

The company said its mortgage investments fell at a 26.1 percent annual rate last month to $752.2 billion. Year-to-date, the portfolio has declined by an annual 4.9 percent from $787.3 billion at the end of last December.

Fannie Mae also reported an ongoing jump in the rate of late payments on single-family loans it guarantees, a problem that has eaten into its capital and forced borrowing from the U.S. Treasury.

In October, the most recent figures available, the conventional single-family serious delinquency rate rose 26 basis points to 4.98 percent. A year earlier, the rate was 1.89 percent.”

• 2) Spain’s deficit worsens to 6.79 percent of GDP

“Spain’s budget deficit for the first 11 months of the year has ballooned to 6.79 percent of gross domestic product — five times last year’s figure — due to dipping tax revenues and the mounting costs of combating the economic crisis, the government said Monday.

The Economy Ministry said in a statement that the central government’s deficit grew to euro71.52 billion ($103.02 billion), up from euro13.96 billion posted in November 2008.

The statement said net income had been euro150.75 billion, 13.9 percent less than in 2008, with tax-derived income at euro82.93 billion, 13.7 percent below last year.

Spain has tumbled from being one of Europe’s top job-creators to having the region’s highest unemployment, at 17.9 percent, in less than two years.”

Today the treasury is selling $124 billion of short term debt including one longer term 2 year note of $44 billion. Bid to cover ratios are decreasing with todays 2 year note at 2.91, very low for a short term bond. The vigilantes are out and in mass and the 30 year bull market for treasuries is over, rates are going up and fund managers will soon start shorting treasuries.

…………Different year, same song