Though lagging the S&P 500 by about 100 basis points since the election (and the banks by a mile), the mortgage REITs are nevertheless higher since the election despite the sharp rise in interest rates.
Mortgage REITs are carry players, of course, and can expect to see boosts to income if long rates rise faster than short rates (though book value could take a hit).
The iShares FTSE Nareit Mortgage REIT ETF (REM +1.2%) today is outperforming the S&P 500's 0.35% advance. The 10-year Treasury yield is down five basis points to 2.30%.
The 10-year Treasury yield is making new bear-cycle highs today, up another seven basis points to 1.86% - its perkiest level since May. The move up in yields is global, with U.K. 10-years up 11 bps and Germany's up 8.5 bps.
Facing at least a little more competition in the yield department, equity REITs have turned sharply lower, with VNQ down 2.1%, and IYR off 1.8%. Mortgage REITs (REM -0.6%) are faring a little better as solid Q3 earnings begin to roll in.
The major U.S. averages have given up early gains and turned red, led by the S&P 500 and Nasdaq, both off 0.25%.
Individual equity REITs: Verreit (VER -2.2%), Welltower (HCN -2.4%), Equity Residential (EQR -1.6%), Omega Healthcare (OHI -3.2%), Simon Property (SPG -3.2%), General Growth (GGP -2.6%), Public Storage (PSA -2.9%), Gramercy Property (GPT -1.9%), Washington Real Estate (WRE -1.2%), Hersha (HT -2.9%), Sunstone Hotel (SHO -1.4%), Stag Industrial (STAG -2%)
Dallas-based Capstead Mortgage (NYSE:CMO) has named Phillip Reinsch as its new president and chief executive officer, replacing Andrew Jacobs.
Jacobs has resigned those two positions and his board seat after 28 years with the company.
Reinsch has been executive VP, chief financial officer and secretary since 2006, and was named the company's treasurer in 2015. Prior to 1993, when he joined Capstead, Reinsch worked for Ernst & Young.
Meanwhile, pain for the mortgage REITs in this case means gain for companies that might benefit from the fast pace of mortgage production. Title insurers like First American Financial (FAF +0.7%) and Fidelity National (FNFV +2.1%) come to mind.
Having repriced over the past few months for a rates lower-for-longer environment, mREITs (REM -1.6%) may have to reprice again as the FOMC minutes more or less signal the central bank's intention to hike rates in June.
Yield-starved names like banks, insurers, and online brokers are soaring, but income producers like Annaly Capital (NLY -2.7%), American Capital Mortgage (AGNC -2.5%), Armour (ARR -3.1%), CYS Investments (CYS -3.4%), Capstead (CMO -2%), Western Asset (WMC -2.3%), Anworth (ANH -2.3%), and Ellington Residential (EARN -2.4%) are going the opposite way.