Mortgage real estate investment trusts are reacting today to some unexpected good news from the Fed. Minutes released from the Fed's most recent meeting indicates that the Fed's bond-buying program may end, either in part or entirely, in 2013. This would remove the government as a competitor for bond-buying mREITs, a situation that has increased bond prices while suppressing their yields.
mREits rely on a sufficient spread between short- and long-term interest rates in order to leverage their typically high yields provided to their shareholders. The Fed's bond purchasing program over the past year or two has caused mREITs to cut their dividends and lower their share values.
For mREITs, an exit by the Fed is welcome news.