Agencies could be a safe haven. I heard some noise there could be demand for governments based on perception of fiscal discipline but $85 billion on a $1.2 trillion deficit isn't much in terms of discipline. As for the economy I think the cuts from sequestration have a greater multiplier effect than simply cutting wasteful spending. Long term sequestration could be good for AGNC and income investing.
Thats why Im on the fence about buying today, I usually buy on SPOs. if it happens I think the market will go down. I know AGNC moves somewhat independent of the market, but this could impact it. This is frustrating!