The Federal Reserve under new Chair Kevin Warsh held interest rates steady at 3.5% to 3.75% in his first meeting, signaling a shift from his earlier calls for cuts amid rising inflation worries. For mortgage REITs Annaly Capital and AGNC Investment, the pause and the prospect of future rate hikes could reduce tangible net book value per share as existing bond-like mortgage securities lose value. Warsh also wants to shrink the Fed's balance sheet, including selling mortgage securities, which would likely widen spreads and further pressure book values in the near term but make new investments more profitable over time. Both REITs, which offer dividend yields above 13%, face near-term headwinds but could see higher dividends long term if higher yields and wider spreads materialize.
AGNC Investment Corp.Fed rate hold and potential future hikes reduce tangible net book value per share as mortgage securities lose value.
Annaly Capital Management, Inc.Fed rate hold and potential future hikes reduce tangible net book value per share as mortgage securities lose value.
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