News that Fannie Mae and Freddie Mac are planning to repurchase as much as $200 billion in home loans in arrears caused higher-coupon agency mortgage-backed securities to drop. "The good news is that Fannie and Freddie will come through with their guarantee on delinquent loans," said Ford O'Neil, senior portfolio manager at Fidelity Investments. "The bad news is that something you bought yesterday at 108 cents is [now] worth 100 cents."

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