Investors fled to the safety of Treasury debt Wednesday but shied away from other government paper, such as those issued by Ginnie Mae and Fannie Mae.
A rally in three-month Treasury bills pushed yields sharply lower, suggesting that money markets are getting out of some commercial paper and fleeing to the relative safety of the short-term Treasury market.
But mortgage paper guaranteed by Ginnie Mae--which is to say, the federal government--is now trading as if it's riskier than corporate paper issued by industrial companies.
The same is true for Fannie Mae paper. The spreads on this paper over Treasuries is now wider than Triple-b or investment-grade corporates.
No one thing explains such dislocations, except that there is a flight to liquidity and a lot of things that used to make sense, don't make sense anymore.