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Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony...

Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms.
Comments (13)
  • Dividend Pros
    , contributor
    Comments (154) | Send Message
     
    No surprise. Here's how the agency reits are affected by the end of qe: http://seekingalpha.co...
    23 May 2013, 03:13 PM Reply Like
  • MobilePreacher
    , contributor
    Comments (436) | Send Message
     
    CMO bounced
    23 May 2013, 03:18 PM Reply Like
  • Dividend Pros
    , contributor
    Comments (154) | Send Message
     
    ^ The above link tells you why CMO would outperform during this period.
    23 May 2013, 03:20 PM Reply Like
  • durango58
    , contributor
    Comments (275) | Send Message
     
    CMO and MFA are better positioned, yes, but I believe that they will all be fine for at least another year. People keep looking for hidden meanings in Fed statements when none are there.
    23 May 2013, 04:18 PM Reply Like
  • User 11794171
    , contributor
    Comment (1) | Send Message
     
    If you call 5.5 cents a bounce, then yes it did LOL
    23 May 2013, 04:47 PM Reply Like
  • MobilePreacher
    , contributor
    Comments (436) | Send Message
     
    User.... it got down to 11.95 yesterday before bouncing nearly .40, thats a big % move and shows that smart money realizes that the indescrimenent selling of CMO as if it were just like all the other mREITS is a huge buying opportunity.
    24 May 2013, 05:53 AM Reply Like
  • toothdoc7
    , contributor
    Comments (3) | Send Message
     
    10% dividend is not attractive? what are they thinking-you can do better with a 10 year T Note
    23 May 2013, 04:48 PM Reply Like
  • whosez
    , contributor
    Comments (107) | Send Message
     
    No, they're thinking if the dividend is going to come down to 10%, then there are quite a few other 10% dividend payers they could move their money into that don't come with a potential large hit to capital and all the uncertainty and risk around the mREITs now. That's not exactly unreasonable.
    23 May 2013, 05:32 PM Reply Like
  • cgm
    , contributor
    Comments (147) | Send Message
     
    The fact of what happened may result in the FED deciding to not stop its QE3 program for quite a while, or to make its exit extremely slow. That would be better for agency REITS.
    23 May 2013, 05:25 PM Reply Like
  • Tom Guttenberger
    , contributor
    Comments (717) | Send Message
     
    This is interesting for a few reasons -- without readily available price info I am left to speculate. If the spread of MBS is rising relative to treasuries, this is not only indicative of future fed involvement, but of the status of loan quality and of future yield assumptions. If your pool of loans is expected to be of higher credit risk, MBS would command a higher spread, but also if the security imputation yield is lower (implying lower long term yields in the future). The latter feature results in a higher yield spread given that a portion of the cash flow is impulse-path dependent, and yield needs to compensate for the chances of this future step-down in cash flow for the investor.

     

    The rise in yields is not particularly surprising to me, in that I noted these distortions in one of my 3 articles in the last 8 months. The amazing part, I think, is that this is all cocurrent to the circumstances, in which Europe faced a mini meltdown and Japan a veritable one increasing the favoritism for US denominated assets. Where even though external biases are aiding money flow into the US, you see the fed still acting, and interest rates STILL rising. To me this speaks to a risk preference shift to equities and blunt xenophobia of other credit and currency markets in general. I don't know. This has certainly been quite a rally.
    23 May 2013, 05:44 PM Reply Like
  • tstreet
    , contributor
    Comments (702) | Send Message
     
    At some point, withdrawal from QE will be priced into AGNC. Does anyone have a clue when that be?
    23 May 2013, 05:46 PM Reply Like
  • Tom Guttenberger
    , contributor
    Comments (717) | Send Message
     
    Probably when it gets delisted lol.
    23 May 2013, 06:00 PM Reply Like
  • durango58
    , contributor
    Comments (275) | Send Message
     
    When the unemployment rate gets down to 6.25%. The Fed has already promised that in well-documented statements.
    27 May 2013, 02:24 PM Reply Like
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