Treasury yields and mortgage rates have backed up massively over the past few weeks. Mortgage-backed securities (MBS) prices have fallen, some by 5 or 6 points. And agency mortgage REITs have been killed, the implicit logic being that leverage of 7 or 8 times on something falling like a rock can't be good. American Capital Agency Corp. (NASDAQ:AGNC), in that respect, is the poster child of the entire mortgage REIT market.
Many investors and analysts have followed this simple logic, (leverage x MBS price drop) modulo some fudge factor, in order to estimate book value losses on mREITs. Analyzing the drivers of agency mortgage REIT value (MBS, TBAs, specifieds, repos, swaps, swaptions, caps, floors, etc.) is complicated --...
|FREE||SA PRO MEMBERS|
|IDEA GENERATOR||X||Exclusive access to 10 PRO ideas every day|
|INVESTING IDEAS LIBRARY||X||Exclusive access to PRO library of more than 15,000 ideas|
|SECTOR EXPERT NETWORK||X||Exclusive access to all sector experts for direct consultation|
|PERFORMANCE TRACKING||X||Track performance of all PRO stock ideas|
|PROFESSIONAL TOOLS||X||Professional Idea Filters to zero-in based on industry, market cap and more|