Hatteras Financial Corp

Most Recent

  • uploads/// year bond yield LT
    Financials

    Why analysts saw a slow week and a disappointing Black Friday

    The initial reports regarding Black Friday shopping look like we’re seeing the first actual decline in seven years.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Why bonds rallied from the FOMC to a possible government shutdown

    The ten-year bond rallied throughout the week as the market digested the implications of the FOMC (Federal Open Market Commitee) meeting.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Must-know: Why bonds rallied on weak economic and jobs reports

    Bonds followed through on last week’s rally with another rally. After closing out the prior week at 2.66%, interest rates moved lower in response to the weak first quarter GDP report.

    By Brent Nyitray, CFA, MBA
  • uploads///Twos Tens
    Financials

    Strong economic data is causing the yield curve to steepen

    The shape of the yield curve matters almost as much as the absolute level of interest rates to financial companies As a general rule, financial companies (banks, REITs) borrow short and lend long. What this means is that they lever their balance sheet by borrowing at short-term interest rates and generally invest in longer-maturity assets, […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Consumer

    What to watch for in real estate next week

    The week ahead Earnings season is pretty much over. Only five companies will report next week; nobody related to real estate is reporting. Next week is not all that heavy data-wise, although we will get the S&P Case-Schiller Home Price Index and Pending Home Sales. The Case-Schiller data will be from March, which should begin […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fed Assets
    Financials

    The Fed maintains its policy on reinvesting QE assets

    The Fed’s decision to reinvest QE assets in the markets affects REITs. It keeps a bid under TBAs, and it supports MBS values in general.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed dot graph Dec
    Financials

    December FOMC Statement Cheers Stock Investors

    Yesterday, the Federal Reserve ended its September FOMC meeting. It changed its language regarding interest rate normalization going forward.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed dot graph Dec
    Financials

    Stocks fall and bonds rally in the FOMC statement

    Yesterday, the Federal Reserve ended its September FOMC meeting. It changed its language regarding interest rate normalization going forward.

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Must-know: Why the jobs report slammed Ginnie Mae TBAs

    Friday’s stronger-than-expected jobs report was the catalyst for a heavy sell-off in the bond market. The ten-year bond sold off by 15 basis points.

    By Brent Nyitray, CFA, MBA
  • uploads///Import Price Index
    Financials

    Import prices fall in May

    Import prices are an important driver of inflation The Bureau of Labor Statistics releases its U.S. Import and Export Price Indices monthly. The report keeps track of import prices by locality, type, and fuel/non-fuel. It also separates commodities and non-commodities. Commodity prices tend to be more volatile than non-commodity prices, so it makes sense to […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Weekly Realist real estate roundup (Part 2)

    Back to Part 1 Mortgage-backed securities are the starting point for all mortgage market pricing, and they’re the investment of choice for mortgage REITs  When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Why bonds sold off on a stronger-than-expected economic outlook

    Bonds sold off on stronger economic data. The consensus now seems to be around a 50-50 chance of a Fed taper this month.

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs rally before the Fed meeting

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (also know as the TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Real Estate

    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.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae mortgage-backed securities fall nearly 3 points in a week

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can be […]

    By Brent Nyitray, CFA, MBA
  • uploads///HARP Refinances
    Financials

    Why the HARP refis dry up as rates rise, lowering prepay speeds

    HARP was designed to help people who wanted to stay in their home and who had adjustable-rate mortgages where they wouldn’t be able to afford the payment once the mortgage adjusted upward.

    By Brent Nyitray, CFA, MBA
  • uploads///MFA Financial
    Financials

    Why home price appreciation has saved MFA Financial

    MFA Financial is a REIT that invests in both agency and non-agency mortgage-backed securities MFA Financial (MFA) is a mortgage real estate investment trust (REIT) that invests in both agency (government-guaranteed) and non-agency (non-guaranteed) mortgage-backed securities (MBS). Its portfolio is primarily invested in hybrids, adjustable-rate mortgages (ARM), and 15-year fixed-rate mortgages. It chooses to invest […]

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Why Ginnie Mae TBAs rallied despite looming government shutdown

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (also know as the TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product […]

    By Brent Nyitray, CFA, MBA
  • uploads///MR NFIB
    Financials

    NFIB Small Business Survey flashes warning signs for REITs

    The National Federation of Independent Business Optimism Survey is a finger on the pulse of small business.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae TBAs rally as Ben Bernanke soothes the bond market, better for mortgage REITs

    Mortgage-backed securities are the starting point for all mortgage market pricing, and they’re the investment of choice for mortgage REITs  When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them into […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae TBAs flat as rates stabilize, good for mortgage REITs

    Last week was a relatively light week data-wise, and many market participants were off work ahead of the Labor Day weekend.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie TBA LT
    Financials

    Primer on mortgage backed securities, Part 3

    Continued from Primer on mortgage backed securities, Part 2. Basic mortgage backed securities: Fannie Mae, Freddie Mac, and Ginnie Mae Most mortgage backed securities are agency securites, which means they are associated with government guaranteed loans. Fannie Mae and Freddie Mac are government sponsored entities (GSE’s) and do not carry an explicit government guarantee like Ginnie Mae mortgages do. […]

    By Brent Nyitray, CFA, MBA
  • uploads///Dallas Fed
    Financials

    The Dallas Fed explains why the Texas housing market is hot

    The General Business Activity Index rose to 11.4 from 7 the month before. The six-month outlook rose as well, to 18.7 from 11.8. Capital expenditures fell, although most other sub-indices were increasing.

    By Brent Nyitray, CFA, MBA
  • ADP Payrolls come in lower than expected
    Financials

    ADP Payrolls come in lower than expected

    The ADP National Employment Report is a monthly preview of the Labor Department’s Jobs Report Automatic Data Processing (ADP) is a global provider of business outsourcing. They provide a range of services from human resources to payroll. The ADP National Employment Report is published monthly by the ADP Research Institute. It provides a snapshot of […]

    By Brent Nyitray, CFA, MBA
  • uploads///MR homeownership rate
    Financials

    The mortgage market without the government-sponsored entities

    Fannie Mae and Freddie Mac are probably not going to exist in the future. Both Democrats and Republicans recognize the need to reduce the government’s footprint in the U.S. residential real estate market.

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Refinances increase as interest rates fall after the Fed surprise

    The MBA Refinance Index increases again after the Fed maintains its pace of QE (quantitative easing) The Refinance Index rose 3% (to 1,947 from 1,889) after the Fed decided to maintain its current pace of asset purchases. The bond market has been re-adjusting to the idea that we may see the end of quantitative easing soon, and […]

    By Brent Nyitray, CFA, MBA
  • uploads///Hatteras Leverage
    Financials

    Will Hatteras’s reported weak earnings affect other REITs?

    Hatteras suffered a 20% decline in book value per share, as duration risk hit its portfolio and MBS spreads widened—especially in the long-duration sector.

    By Brent Nyitray, CFA, MBA
  • uploads///Dallas Fed
    Financials

    Dallas Fed bounces back in May

    The Dallas Fed Manufacturing Index is a manufacturing-focused index of business activity The Dallas Fed conducts its Texas Manufacturing Survey monthly, and it is similar to many of the other regional Fed surveys, like the Empire State Manufacturing Survey, the Chicago Fed National Activity Index or the Philly Fed. These are all diffusion type indices […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Realist Real Estate Roundup: Government re-opens and bonds rally

    The three-week shutdown officially ended last week, as Congress came to an agreement to fund the government and raise the debt ceiling.

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    MBA Refinance index falls; prepayment worries fade into the background

    The MBA Refinance Index is an important index that forecasts mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    10-year bond breaks out of its trading range on positive reports

    Mortgage-backed securities are the starting point for all mortgage market pricing, and they’re the investment of choice for mortgage REITs  When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them […]

    By Brent Nyitray, CFA, MBA
  • uploads///HARP Refinances
    Financials

    HARP refinances fall in Q2 as rates increase, effect on REITs

    The Home Affordable Refinance Program permits homeowners with negative equity in their homes to refinance at today’s lower rates The Home Affordable Refinance Program was instituted in 2009 to allow homeowners with negative equity to take advantage of today’s low interest rate environment. Before HARP, banks wouldn’t lend more than the home’s value. In real-estate […]

    By Brent Nyitray, CFA, MBA
  • uploads///Dallas Fed
    Financials

    Manufacturing decelerates in the Dallas region, affecting REITs

    The Dallas Fed survey asks about output, employment, orders, prices, shipments, inventories, capacity utilization, prices, capital expenditures, and some other indicators.

    By Brent Nyitray, CFA, MBA
  • uploads///Import Price Index
    Financials

    Must-know: Import prices fall, keeping inflation well-contained

    Inflation isn’t the Fed’s biggest concern at the moment. If anything, it’s worried that inflation is too low.

    By Brent Nyitray, CFA, MBA
  • uploads///NFIB Small Business Optimism
    Financials

    Must-know: NFIB Small Business Optimism Survey slips in October

    When forecasting the Fed’s next move, it pays to focus on small business earnings as much as or more than the earnings of, say, Apple.

    By Brent Nyitray, CFA, MBA
  • uploads///HARP Refinances
    Financials

    HARP refinances drop off as interest rates for mortgages increase

    HARP refinances fell to 30,000 in December from 38,700 in November.

    By Brent Nyitray, CFA, MBA
  • uploads///NLY
    Financials

    Annaly book value per share declines with the rest of the sector

    Annaly Capital is the biggest U.S. mortgage REIT by market capitalization Annaly Capital (NLY) is a self-managed REIT that invests in a variety of real estate–related securities, including pass-through certificates, collateralized mortgage obligations, callable agency debt, and other mortgage-backed securities (MBS). Recently, Annaly has focused on the agency product, and 90% of its portfolio has […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield historical
    Financials

    Is the secular bond bull market over? A primer on interest rate risk, Part 6

    Back to Part 5 Non-agency mortgage backed securities – interest rate risk and credit risk When we think of non-agency paper, we have both interest rate risk and credit risk. The interest rate risk borne by non-agency mortgage backed securities is more or less the same as agency paper. They have the same exact issues […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Mortgage Bankers Association Refi Index rises in the week ending May 3

    The MBA Refinance Index is an important index to forecast mortgage activity and prepayments The Mortgage Bankers Association (MBA) index of refinance activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Must-know: Why the government shutdown left the markets yawning

    The shutdown should be modestly bond bullish in that it keeps the Fed on hold, at least through the October meeting.

    By Brent Nyitray, CFA, MBA
  • uploads///ARMs vs s
    Financials

    Spread between 5/1 ARMs and 30-year fixed rate mortgages blows out

    The spread between the 30-year fixed rate mortgage and the 5/1 ARM changes over time After the financial crisis, Adjustable Rate Mortgages (ARM) got somewhat of a dirty name. Lenders were criticized for using the low “teaser” rate on mortgages to evaluate whether the buyer could afford the home; many borrowers were unable to afford […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Lack of volatility implications for NLY, AGNC

    Mortgage-backed securities are the starting point for all mortgage market pricing, and they’re the investment of choice for mortgage REITs  When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fed  Inflation Forecast
    Financials

    Inflation remains well-anchored: Good news for mortgage REITs

    The Fed prefers to use the Personal Consumption Expenditure (or PCE) Index as its measure of inflation over the Consumer Price Index, which is more familiar to most people. There are a few differences between the two.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Why Fannie Mae TBAs rallied on the Fed’s decision

    Trading in Fannie Mae TBAs When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can be traded. TBAs settle once a month, and […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Why REITs may suffer as the MBA Refinance Index falls even as mortgage rates fall

    The MBA Refinance Index is an important index that forecasts mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Refinances fall as prepayment risk is much lower than 1 year ago

    The Refinance Index fell 3% (from 1,598 to 1,548), as rates rose 15 basis points. Refinances have been dropping like a stone.

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs have remained flat on the government shutdown

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (also know as the TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product […]

    By Brent Nyitray, CFA, MBA
  • uploads///MFA dividend
    Financials

    Understanding MFA Financial as part of the REIT landscape

    MFA Financial (MFA) is a mortgage REIT that invests in both agency and non-agency mortgage-backed securities. Its portfolio is primarily invested in hybrids, adjustable-rate mortgages, and 15-year fixed-rate mortgages.

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Mortgage Bankers Association Refinance Index falls, REITs prepayment worries fade

    The MBA Refinance Index is an important index that forecasts mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield historical
    Consumer

    What exactly is quantitative easing? Part 5

    Back to part 4 Mark-to-market issues The Fed does actually have a profit and loss statement and it is a line item on the Federal Budget. Since quantitative easing began, the Fed has profited from this activity as it has pushed up prices through its own buying. As it stops purchasing MBS and Treasuries, it […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Refinances tick up as bond market sell-off takes a breather

    The MBA Refinance Index is an important index to forecast mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Weekly mortgage applications review (Part 4)

    Back to Part 3 The MBA Refinance Index falls for the eighth straight week The Refinance Index fell to 0.1% (to 2,247 from 2,245)  in the context of a volatile week in the bond market. The bond market has been re-adjusting to the idea that we may see the end of quantitative easing in fall. That said, […]

    By Brent Nyitray, CFA, MBA
  • uploads///Consumer Debt
    Financials

    Consumer debt falls, low interest and high prepayments for REITs

    Elevated levels of consumer debt have been one of the reasons why the recovery has been so weak.

    By Brent Nyitray, CFA, MBA
  • uploads///Convexity
    Financials

    Primer on mortgage backed securities, Part 5

    Continued from Primer on mortgage backed securities, Part 4. Prepayment risk Prepayment risk and interest rate risk go hand-in-hand. The main difference between a mortgage backed security and a government bond is that with a government bond, you know exactly when you will get your principal and interest payments. If you purchase a 7-year Treasury […]

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs rally as bond market stabilizes

    Mortgage-backed securities (MBS) are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can […]

    By Brent Nyitray, CFA, MBA
  • uploads///AGNC
    Financials

    American Capital Agency disappoints but has reduced leverage

    Needless to say, all REITs have suffered over the last quarter, as the Fed has threatened to take away the quantitative easing punchbowl and rates have risen.

    By Brent Nyitray, CFA, MBA
  • uploads///Sovereign Yields
    Financials

    Is it something Bernanke said? Or something else?

    Sovereign yields have been rising since the beginning of May Investors in the U.S. have been focused on the rising yield of the 10-year bond since the beginning of May. Since bottoming out at 1.63% on May 1st, the U.S. 10-year yield has been rising in a dramatic fashion, to close at 2.17% as of […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae TBAs have remained flat on the government shutdown

    Trading in Fannie Mae TBAs When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can be traded. TBAs settle once a month, and […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield historical
    Financials

    Investing in REITs during a rising interest rate environment

    We may see the occasional cyclical bond bull markets in the context of a secular bear market, but the overall trend is toward increasing interest rates.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae MBS continue to sell off

    Mortgage backed securities are the starting point for all mortgage market pricing, and are the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage backed securities, it is referring to the To-Be-Announced (TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBS tranching
    Financials

    Primer on mortgage backed securities, Part 1

    What are mortgage backed securities? Mortgage backed securities are pools of individual mortgages that have similar characteristics. They allow a relatively illiquid asset (an individual home mortgage) to be converted into a very liquid asset that can be traded with relative ease. They also allow an issuer to divide up the cash flows in order […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Must-read: Worst day for Fannie to-be-announced loans since sell-off began

    Mortgage-backed securities are the starting point for all mortgage market pricing, and they’re the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Mortgage Bankers Association Refinance Index falls 8% in the week ending May 10

    The MBA Refinance Index is an important index to forecast mortgage activity and prepayments The Mortgage Bankers Association (MBA) index of refinance activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae TBA’s sell off in sympathy with other bond markets

    Mortgage backed securities are the starting point for all mortgage market pricing, and are the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage backed securities, it is referring to the To-Be-Announced (TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous […]

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBA trading

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (also know as the TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product […]

    By Brent Nyitray, CFA, MBA
  • uploads///Dallas Fed
    Financials

    Dallas Fed Manufacturing Index falls in June, but still positive

    The Dallas Fed Manufacturing Index is a manufacturing-focused index of business activity The Dallas Fed conducts its Texas Manufacturing Survey monthly, and it’s similar to many of the other regional Fed surveys, like the Empire State Manufacturing Survey, the Chicago Fed National Activity Index, or the Philly Fed. These are all diffusion-type indices that ask respondents whether a […]

    By Brent Nyitray, CFA, MBA
  • uploads///Fed  unemployment forecast
    Financials

    Why the September 2014 FOMC meeting offered good news for REITs

    Yesterday, the Federal Reserve ended its September Federal Open Market Committee meeting and decided to continue to reduce asset purchases. It will reduce purchases of Treasuries by $5 billion a month.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield historical
    Financials

    Is the secular bond bull market over? A primer on interest rate risk, Part 4

    Back to Part 3 Interest rate risk and mortgage backed securities Mortgage backed securities have different interest rate risk than conventional Treasuries and corporate bonds. This is because of prepayment risk. When interest rates fall, borrowers will typically refinance their mortgages. To an investor, they will get their pro-rate allocation of principal early. They will not get […]

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs flat, low volatility good for mortgage REITs

    Finally, we saw a week of calm in the bond market last week.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed Balance Sheet
    Financials

    Fed balance sheet pushes $3.5 trillion, negative REITs outlook

    The Fed’s balance sheet rose to over $3.48 trillion in Q2 as quantitative easing went into overdrive The Fed’s asset purchase program, also known as quantitative easing, has swelled the Fed’s balance sheet from under $1 trillion pre-crisis to an all-time high of $3.48 trillion. The Fed has pursued this strategy in order to drive down […]

    By Brent Nyitray, CFA, MBA
  • uploads///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs rally as the Fed keeps the pedal to the metal

    Mortgage-backed securities are the starting point for all mortgage market pricing and the investment of choice for mortgage REITs When the Federal Reserve talks about buying mortgage-backed securities, it’s referring to the To-Be-Announced (also know as the TBA) market. The TBA market allows loan originators to take individual loans and turn them into a homogeneous product […]

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    The Fed keeps the punch bowl around a little longer

    The ten-year bond rallied during the week, with the yield falling to 2.73%. The markets were expecting some sort of reduction in asset purchases and were caught off guard when the Fed decided to stand pat.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Why bonds shrugged off the FOMC minutes and housing releases

    Bonds would have ordinarily rallied on weak data, but the lack of bad news out of emerging markets may have pulled some of the flight to safety money out of bonds.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed Unemployment Forecast
    Financials

    Federal Reserve significantly lowers unemployment forecast

    The Federal Reserve includes formal economic forecasts in the minutes from its Federal Open Market Committee (FOMC) Meetings The Federal Reserve typically releases a short press release after its two day FOMC meeting, with a general overview and its decision on interest rates. A month later, they release the actual minutes of the meeting which […]

    By Brent Nyitray, CFA, MBA
  • uploads///MFA Book Value
    Earnings Report

    MFA Financial Reports a Drop in Book Value per Share

    MFA Financial’s (MFA) book value per share fell from $7.96 in the second quarter of 2015 to $7.70 in the third quarter.

    By Brent Nyitray, CFA, MBA
  • uploads///Fannie Mae TBA
    Financials

    Fannie Mae TBAs rally as Fed debates end of quantitative easing

    Trading in Fannie Mae TBAs When the Federal Reserve talks about buying mortgage-backed securities (MBS), it’s referring to the To-Be-Announced market (usually referred to as the TBA market). The TBA market allows loan originators to take individual loans and turn them into a homogeneous product that can be traded. TBAs settle once a month, and […]

    By Brent Nyitray, CFA, MBA
  • uploads///sharon mccutcheon lnbXtxFGZw unsplash
    Financials

    Fed’s Balance Sheet swells to $3.2 Trillion

    The Fed’s balance sheet rose to over $3 trillion in Q1 as quantitative easing goes into overdrive.

    By Brent Nyitray, CFA, MBA
  • uploads///ADP Payrolls
    Financials

    ADP signals a good payroll report, which could hurt REITs

    Private sector employment increased by 191,000 in March. January’s numbers were revised upward from 139,000 to 178,000.

    By Brent Nyitray, CFA, MBA
  • uploads///MR TIC flows
    Financials

    High foreign net purchases of U.S. assets in July, good for REITs

    For the first time since January, foreigners are net buyers of U.S. assets. If foreign investors return to selling mortgage-backed securities, the REITs will feel the pain.

    By Brent Nyitray, CFA, MBA
  • uploads///HAMP modifications
    Financials

    HAMP modifications fall to 11,900 in the month of April

    The Home Affordable Modification Program is one of President Obama’s programs to provide relief to distressed home owners The Home Affordable Modification Program lowers the monthly payments for borrowers by reducing the interest rate or extending the term of the loan. So far, the Federal Housing Finance Agency has resisted allowing principal reductions. They will, […]

    By Brent Nyitray, CFA, MBA
  • uploads///HTS NLY HTS highlights
    Miscellaneous

    What Are the Conditions of the Hatteras-Annaly Merger?

    Hatteras has a no-shop provision with a fiduciary out. This means that Hatteras isn’t allowed to solicit other buyers during the pendency of the merger.

    By Brent Nyitray, CFA, MBA
  • uploads///MFA Book Value
    Financials

    Must-know highlights of MFA Financial’s second quarter 2014

    MFA Financial reported net income of $0.20 a share. This was higher than the Wall Street estimate of $0.19 per share. Book value per share increased 2.1%, to $8.37 per share.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond intraday
    Financials

    Must-know: Bonds sell off on the October FOMC minutes

    Lately, there are two adjectives the Fed uses to characterize economic data points—”moderate” and “modest.”

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Bond yields tick up as hedges play the redemption trade

    We started to see some hedge funds playing the redemption trade late in the week. Hedge funds were buying the long end of the curve.

    By Brent Nyitray, CFA, MBA
  • uploads///AGNC dividend
    Financials

    American Capital Agency maintains its dividend of $0.65 a share

    Most corporations loathe cutting their dividend because of the message it sends to Wall Street. So volatile dividends are generally rare. But for REITs, they’re a fact of life.

    By Brent Nyitray, CFA, MBA
  • uploads///MFA Credit exposure
    Earnings Report

    MFA Financial Keeps Swapping Interest Rate Risk for Credit Risk

    MFA Financial has been increasing its book of nonperforming and re-performing MBS, and as a result, it’s much better positioned for a rising interest rate environment.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Why bonds have finally stopped ignoring strong reports

    The bond market broke from its recent pattern of ignoring bond-bearish data and rallying on bond-bullish data. For the most part, the economic data last week was weaker than expected.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Why bonds were in for a wild ride last week

    The ten-year bond influences everything from mortgage rates to corporate debt. It’s now the benchmark for long-term U.S. interest rates.

    By Brent Nyitray, CFA, MBA
  • uploads///Initial Jobless Claims
    Financials

    Initial jobless claims are back at boom-time levels

    Initial jobless claims are one of the few labor market indicators released every week. Unemployment is a profound economic growth driver.

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Real Estate

    Do REITs need to fear another refi wave?

    It looks like the MBA refinance index is still flat on its back. So while we could see a pickup in refis, so far it hasn’t materialized.

    By Brent Nyitray, CFA, MBA
  • uploads///GN FN spread
    Real Estate

    The markets react to new insurance guidelines

    After Obama announced the new insurance guidelines, the mortgage-backed securities market, especially the TBA market, reacted violently.

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    Are lower rates enough to trigger another refinance wave?

    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.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed Assets
    Financials

    Quantitative Easing Is Over, But What About The Fed Balance Sheet?

    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.

    By Brent Nyitray, CFA, MBA
  • uploads///NLY book value
    Real Estate

    Annaly CEO Wellington Denahan is optimistic about the end of QE

    Annaly was less leveraged than its peer group, with a debt-to-equity ratio of 5.4:1. At the end of Q213, the leverage ratio was 6.2:1, so Annaly delevered pretty aggressively.

    By Brent Nyitray, CFA, MBA
  • uploads///AGNC Book Value Per Share
    Financials

    American Capital Agency’s book value per share increases

    American Capital Agency’s (AGNC) book value per share increased from $25.54 in the third quarter to $25.74 in the fourth quarter.

    By Brent Nyitray, CFA, MBA
  • uploads///NLY leverage
    Financials

    Annaly bumps up its leverage in 3rd quarter 2014

    How do agency REITs pay such high dividends while investing in securities that don’t pay much? Mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), MFA Financial (MFA), Capstead (CMO), and Hatteras (HTS) tend to have high dividend yield. Yet agency mortgage-backed securities don’t pay low-double-digit returns. To achieve these sorts of returns, REITs—particularly agency […]

    By Brent Nyitray, CFA, MBA
  • uploads///MBA Refinance Index
    Financials

    An Old Headache Returns: Increased Prepayment Speeds Up

    The Mortgage Bankers Association (or MBA) Refinance Index rose 66% from 1,349 to 2,245 as rates finally fell enough to allow refinances.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    The 10-year bond yield approaches pre–taper tantrum levels

    Bonds yields have been influenced heavily by European rates since last summer, when rates globally began to fall as the markets speculated about further QE.

    By Brent Nyitray, CFA, MBA
  • uploads/// year bond yield LT
    Financials

    Economic strength lifts the 10-year bond yield higher

    Overall, we’ve seen the 10-year bond yield pick up 41 basis points over the past two weeks. US data was on the strong side, especially the JOLTS report.

    By Brent Nyitray, CFA, MBA
  • What exactly is quantitative easing? Part 1
    Consumer

    What exactly is quantitative easing? Part 1

    The dual mandate The Federal Reserve is entrusted with monitoring the U.S. money supply, supervising the banking system, and using monetary policy to drive the economy. The Fed’s role in driving the economy is based on a dual mandate – that the Fed must fight inflation and maximize employment. The Fed had a sole mandate […]

    By Brent Nyitray, CFA, MBA
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