But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
The End Of Quantitative Easing Could Make Mortgage REITs Vulnerable
Big agency REITs like Annaly (NLY) and American Capital Agency (AGNC) took the chance to deleverage their balance sheets after the warning in the spring of 2013.
Economic forces that work at cross-purposes to each other are driving the commercial real estate investment trust (or REIT) sector. This is similar to the situation that non-agency mortgage REITs are facing.
The “elephant in the room” at the Fed is that rates need to return to more normal historical levels at some point. This will be in the context of a massive Fed balance sheet. This creates issues on many different levels.
In the FOMC review of the financial situation, the Fed discusses the state of the credit markets and the interbank market. The Fed gets rough data on Treasury trading from primary dealers through its Desk Survey.
The FOMC minutes go deeper than the FOMC statement and explain the current discussions. Commercial real estate investment trusts are sensitive to the interest rate. So, these companies carefully analyze the minutes.
The Thomson Reuters/University of Michigan Consumer Confidence Index is an important indicator of the consumer’s perception of the US economy.
Consumer spending indirectly drives mall REITs. More spending drives more stores and lowers vacancy rates.
Industrial production and capacity utilization are numbers that get a lot of attention from the Fed. These figures not only help forecast economic activity but also impact inflation.
Fannie Mae puts out a monthly National Housing Survey that measures consumers’ attitudes about housing and the economy. In many ways, it’s similar to the consumer confidence indices. However, the majority of the questions relate to real estate.
Ginnie Mae and the to-be-announced market The Fannie Mae to-be-announced (or TBA) market represents the usual conforming loan—the plain Fannie Mae 30-year mortgage. Meanwhile, Ginnie Mae TBAs are where government…
Fannie Mae and the to-be-announced market When the Federal Reserve talks about buying mortgage-backed securities (or MBS), it’s referring to the to-be-announced (or TBA) market. The TBA market allows loan…
The ten-year bond influences everything from mortgage rates to corporate debt. It’s now the benchmark for long-term US interest rates.
The most important mortgage REIT or real estate investment trust data probably appeared in the Initial Jobless Claims and JOLTS, the Job Openings and Labor Turnover Survey.
Last week saw a dearth of data for real estate investors, but this week promises to offer a lot more information. Some major macroeconomic reports will be coming out for industrial production and housing starts.
There were 4.73 million job openings in September, up 22% year-over-year. Those job openings came in below the Wall Street estimate of 4.8 million and well above the 3.6 million average since the BLS began compiling the index in 2000.
The increase in rates has basically put prepayment worries on the back burner for REITs. The lack of a reaction in the refinance index on the back of a drop in rates could mean we’re finally seeing prepayment burnout. This would be good news for REITs.
Regulators are anxious to see private-label deals return, as almost everyone in Washington, D.C. agrees the government cannot continue to bear the lion’s share of the credit risk in the system.
The average 30-year fixed-rate mortgage rose 2 basis points, from 3.97% to 3.99%. Mortgage rates spent most of the summer stuck around 4.25% and only recently acknowledged the strong bond market rally.
These days, the Fed isn’t all that concerned about inflation raging out of control. Indeed, it would like to see higher inflation.
Wage inflation is probably necessary if we are to see actual inflation. Commodity price inflation in the context of flat wages is recessionary.