- In the midst of a market panic and with the sector trading at massive discounts to book value, it takes a pair to issue downgrades now, but that's what Wells Fargo has done, cutting Annaly Capital (NLY -2.9%), MFA Financial (MFA -4.1%), Hatteras Financial (HTS -4.5%), American Capital Mortgage (MTGE -5%), AG Mortgage (MITT -5.9%), and Two Harbors (TWO -3.4%) to Market Perform from Outperform.
- At last check one month ago, these names were trading at discounts to NAV ranging from about 10-30%. Presumably those discounts have widened as the stock prices have crumbled further since then, and book values have likely remained stable or even risen.
- For the last year, mREITs have had to contend with the possibility of higher interest rates across the board. Now they have to deal with a sharply flatter yield curve as the 10-year Treasury yield has fallen about 30 basis points since the Fed hiked last month.
- Good news? FRBNY President Bill Dudley is on the tape this morning suggesting negative interest rates as a possibility if the economy sours. That should help mREIT funding costs.
- ETFs: MORL, REM, MORT, LMBS
Wells Fargo throws in the towel on mortgage REITs
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Symbol | Last Price | % Chg |
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NLY | - | - |
Annaly Capital Management, Inc. |