Annaly Capital Management Inc

Most Recent

  • uploads///Fannie Mae TBA
    Financials

    Why Fannie Mae securities rallied with bonds about 1/4

    The main action driving TBAs specifically seems to be out of Washington, between the Fed purchases and the government’s policies to drive origination.

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

    Why Did Bonds Barely React to the FOMC Minutes?

    On July 6, the Fed released the minutes from the June FOMC meeting. The Brexit vote mainly overshadowed anything that came out of the June FOMC meeting.

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

    Fannie Mae TBAs Rise with the Bond Market

    For the week ending August 12, 2016, Fannie Mae TBAs ended at 103 24/32—up 4 ticks for the week. The ten-year bond yield fell by 8 basis points to 1.51%.

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

    Recommendation: REITs are getting bullish—should you?

    2013 was a very difficult year for mortgage REITs, as the Fed finally began to lighten its footprint in the mortgage market by reducing asset purchases.

    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///Fannie Mae TBA
    Miscellaneous

    Fannie Mae TBAs Rally with the Bond Market

    For the week ending April 1, Fannie Mae TBAs ended at 105 2/32. The ten-year bond yield, tradable through TLT, fell by 5 basis points to 1.7%.

    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///MR consumer confidence
    Financials

    Consumer confidence ticks down as Americans fret the economy

    The Conference Board Consumer Confidence Index fell to 79.7, from an upward-revised 81.8 in August. (Consumer confidence in 1985 was 100.)

    By Brent Nyitray, CFA, MBA
  • uploads///GDP
    Consumer

    GDP Will Be the Highlight This Week

    We’re nearing the end of August—many investment professionals will be watching markets from the beach. The second revision to Q2 GDP will be out on Friday.

    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///Unemployment Rate
    Consumer

    Why the FOMC minutes and weak payroll data drove REITS and builders

    Last week, we had two important data points with the FOMC minutes from the December meeting and the Employment Situation report on Friday.

    By Brent Nyitray, CFA, MBA
  • uploads///Housing starts
    Macroeconomic Analysis

    Last Week’s Housing Starts Came In Stronger than Expected

    Last week we had some stronger-than-expected economic data with housing starts and building permits topping 1.1 million.

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

    Recommendation: Should REIT investors fear an accelerated taper?

    Last week, we had some stronger-than-expected data with housing starts and some of the industrial production data. Does that mean the Fed will accelerate tapering?

    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///Fed  Inflation forecast
    Financials

    Why Did the Fed Increase Its Inflation Forecast?

    The Fed has been consistently high in its inflation forecasts. At the June 2016 FOMC meeting, the Fed took up its 2016 inflation forecast from 1.6% to 1.7%.

    By Brent Nyitray, CFA, MBA
  • uploads///Fed  GDP forecast
    Company & Industry Overviews

    Why the FOMC Statement Is Constructive on the Economy

    The FOMC didn’t change its characterization of the economy. The labor markets are improving, economic growth slowed, and household spending moderated.

    By Brent Nyitray, CFA, MBA
  • uploads///Hourly Earnings
    Macroeconomic Analysis

    The Jobs Report: This Week’s Highlight for REIT Investors

    We’ll get a lot of important economic data this week, and the biggest release will be the jobs report on Friday.

    By Brent Nyitray, CFA, MBA
  • uploads///Capacity Utilization
    Financials

    Capacity Utilization falls in May

    Capacity utilization is a bellwether of economic activity Capacity utilization is a good top-down macroeconomic indicator, which helps forecast the labor market, final demand, consumption, and inflation. While manufacturing is no longer the primary driver of the U.S. economy, it still influences the economy to a large degree, particularly for unskilled workers. U.S. manufacturing is […]

    By Brent Nyitray, CFA, MBA
  • uploads///FHFA HPI Cumulative
    Macroeconomic Analysis

    Home Prices Hit New Records: What Does This Mean for REITs?

    The recent 5.5% year-over-year gain for home prices has put the FHFA House Price Index about 3% past its April 2007 levels.

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

    Ginnie Mae securities catch a bid as bonds rally, reaching 105 5/32

    The front-month Ginnie Mae TBA drifted higher as bonds rallied. After starting the week at 105 17/32, they added about 5/8 of a point to close at 105 5/32.

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

    Consumer Confidence dips in May but still improving.

    The Thomson Reuters/University of Michigan Consumer Confidence Index is a leading indicator for the U.S. economy The Thomson Reuters/University of Michigan Consumer Confidence Index is an important indicator of the consumer’s perception of the U.S. economy. Similar to other consumer confidence measures, it asks consumers about their views on the current economic conditions, and their […]

    By Brent Nyitray, CFA, MBA
  • Weekly economic recap: why REITs are crushed while homebuilding is bullish
    Consumer

    Weekly economic recap: why REITs are crushed while homebuilding is bullish

    The ten-year bond is the basis for all mortgage pricing Long-term interest rates are priced off the benchmark long-term bond, which is the ten-year Treasury. These days, the ten-year bond reacts to economic data through the Federal Reserve’s asset purchase program, also known as quantitative easing (QE). As a general rule, economic data that shows […]

    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///Fed  Unemployment Forecast
    Financials

    Why The Fed Continues To Anticipate Lower Unemployment

    At the March 2013 meeting, the Fed was forecasting that 2015 unemployment would be 6.7%–7%. Now, the Fed is forecasting that unemployment will be 5.2%–5.3%.

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

    Why did the Ginnie Mae TBAs catch a bid on the bond market rally?

    The front-month Ginnie Mae TBA drifted higher as bonds rallied. After starting the week at 105 4/32, they traded 7/16 higher to close at 105 18/32.

    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///FHFA House Price Index
    Company & Industry Overviews

    Home Prices Keep Climbing, and Here’s What It Means

    The latest Existing Home Sales report shows available inventory at 4.7 months and a market that’s tilted heavily in favor of sellers.

    By Brent Nyitray, CFA, MBA
  • uploads///Unemployment rate LT
    Macroeconomic Analysis

    January Saw Unemployment Drop below 5%

    In January 2016, the unemployment rate fell from 5.0% to 4.9%, or by about 7.8 million people. The underemployment rate was flat at 9.9%.

    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///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///MBA Mortgage Apps
    Financials

    Massive mortgage market transformation: The return of subprime?

    The mortgage market is undergoing a massive transformation as the private label mortgage market returns.

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

    Why Ginnie Mae securities followed bonds lower

    The ten-year bond sold off, with yields increasing from 2.19% to 2.27%. Ginnie Mae TBAs followed, dropping from 104 23/32 to 104 20/32.

    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///Ginnie Mae TBA
    Real Estate

    Ginnie Mae securities shake off the end of quantitative easing

    The ten-year bond sold off, with yields increasing from 2.27% to 2.34%. Ginnie Mae TBAs bucked the trend, rising from 104 20/32 to 104 25/32.

    By Brent Nyitray, CFA, MBA
  • uploads///Consumer Price Inflation rates
    Macroeconomic Analysis

    Key for Investors: Understanding Inflation and Its Implications

    Inflation represents a rise in the general price level in a country or region. The higher the inflation, the lower the quantum of a particular good that can be purchased.

    By David Ashworth
  • 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
  • uploads///Ginnie Mae TBA
    Financials

    Why mortgage-backed securities were calm ahead of more Fed tapering

    Mortgage-backed securities (both Fannie and Ginnie) were flat as the bond market barely moved. On Wednesday, the FOMC released the minutes from their January meeting.

    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///MSR
    Financials

    Mortgage servicing rights increase in value as interest rates rise

    Mortgage servicing rights are one of the few financial assets that increase in value as rates rise Most mortgage REITs are exposed to changes in interest rates, and are usually long-duration, which means that the value of their portfolio decreases in value as interest rates rise. Good examples of these types of REITs would be […]

    By Brent Nyitray, CFA, MBA
  • uploads///FHFA HPI Cumulative
    Company & Industry Overviews

    Behind Home Prices: Status Compared to Incomes

    April’s 5.9% year-over-year gain for home prices has put the FHFA (Federal Housing Finance Agency) House Price Index at about 3% above its April 2007 level.

    By Brent Nyitray, CFA, MBA
  • uploads///CYS Dividend
    Financials

    CYS Investments: An important mid-sized agency mortgage REIT

    CYS Investments (CYS) is a diversified agency mortgage REIT that invests all across the agency mortgage-backed security (or MBS) space.

    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/// year bond yield LT
    Financials

    Must-know update: Bonds benefit from the risk-off trade

    There was almost no important economic data last week, so bonds traded inversely to the stock market.

    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///MBA Mortgage Apps
    Financials

    Mortgage applications rebound after a short holiday week

    Mortgage applications fall off a cliff on a short week The MBA Applications index rose 11% after falling 13% the week before, which was a holiday-shortened week. Refinances drove the increase, with an 18% jump in the index. Purchase activity also rose, although only slightly. The summer selling season is winding down, and we’re entering […]

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

    Why ADP and Moody’s numbers suggest a weak jobs report

    Private sector employment increased by 139,000 in February. January’s numbers were revised downward from 175,000 to 127,000.

    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///Ginnie Mae TBA
    Financials

    Ginnie Mae TBAs are unchanged despite a bond market sell-off

    The front-month Ginnie Mae TBAs were bid up as bonds rallied eight basis points. Ginnie Mae TBAs began the week at 106 21/32 and ended up in the same place. The underlying bond market sold off 12 basis points.

    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///Fannie Mae TBA
    Financials

    Why Fannie Mae TBAs followed bonds higher, rising 9 basis points

    The ten-year bond yield rallied 9 basis points last week, and TBAs followed. Bonds had been benefiting from the “risk-off” trade.

    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 historical
    Consumer

    Week in review: Bonds fell slightly as the government shut down

    The ten-year bond is the basis for all mortgage pricing Long-term interest rates are priced off the benchmark long-term bond, which is the ten-year Treasury. These days, the ten-year bond reacts to economic data through the Federal Reserve’s asset purchase program, also known as quantitative easing (or QE). As a general rule, economic data that shows […]

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

    Background on MFA Financial

    As a REIT, MFA Financial must distribute 90% of its income to its shareholders, and it isn’t subject to income tax at the corporate level.

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

    Why Ginnie Mae securities flatlined on a lack of economic data

    The front-month Ginnie Mae TBAs were unchanged as bonds flatlined on the lack of economic data. Ginnie Mae TBAs began and finished the week at 106 5/32.

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

    Bonds and REITs collapse on FOMC statement

    The Federal Open Market Committee determines interest rate policy The June Federal Open Market Committee (FOMC) meeting was recently completed and the results of that meeting were released at 2:00 pm EST. The FOMC statement gives color on how the Fed views the economy, how they are thinking about moving forward, and some guidance regarding […]

    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///Ginnie Mae TBA
    Financials

    Rising Bond Yields Cause Ginnie Mae TBAs to Fall

    Ginnie Mae and the TBA market The Fannie Mae TBA (to-be-announced) market represents the usual conforming loan—the plain Fannie Mae or Freddie Mac 30-year mortgage. When a mortgage banker makes a Veterans Affairs or Federal Housing Authority loan, that loan is securitized and put into a Ginnie Mae TBA. The biggest difference between Fannie Mae […]

    By Brent Nyitray, CFA, MBA
  • uploads///Hourly Earnings
    Macroeconomic Analysis

    Average hourly earnings tick up along with inflation to $24.78

    Average hourly earnings increased 0.1% month-over-month and 2.0% year-over-year to $24.78 an hour. Average weekly hours were flat at 34.6.

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

    What to watch for in real estate, stormy week ahead

    After a stormy week, bonds have a lot of data to navigate Last Friday’s jobs report punctuated what should have been a relatively dull week with a holiday in the middle. The 10 year bond sold off on the number, increasing the yield from 2.5% to 2.74%. We will see Monday if that move was overdone. […]

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

    Why Ginnie Mae securities are flat amid a declining bond market

    The front-month Ginnie Mae TBAs worked their way higher as bonds rallied on weak economic data. Ginnie Mae TBAs began and finished the week at 106 17/32.

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

    Why Fannie Mae TBAs sold off in sympathy with the bond market

    The main action driving TBAs specifically seems to be out of Washington, between the Fed purchases and the government’s policies to drive origination.

    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///Employment Cost Index
    Macroeconomic Analysis

    Employment Costs Rise with Healthcare Inflation

    Employment costs rose 0.6% in the quarter ending March 31, 2016. Over the past 12 months, compensation costs for civilian workers have risen 1.9%.

    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///Initial Jobless Claims
    Financials

    Why initial jobless claims jumped on the government shutdown

    Initial jobless claims increased to an annualized rate of 374,000 for the week ended October 4. Unemployment has been the Achilles’ heel of this recovery.

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

    Ginnie Mae Securities Buck The Recent Trend And Rally

    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 loans go—such as the federal housing administration (or FHA) and veterans affairs (or VA) loans. The biggest difference between a Fannie Mae mortgage-backed security (or […]

    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///Fannie Mae TBA
    Financials

    Fannie Mae TBAs fell as the 10-year bond yield dropped 8 points

    The ten-year bond yield fell off 8 basis points last week, and TBAs followed. Bonds had been benefiting from the “risk-off” trade.

    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///Housing starts
    Consumer

    Week in preview: Why the Fed will be in the spotlight

    Next week is all about the FOMC (Federal Open Market Committee) meeting The FOMC meets on Tuesday and Wednesday, and we should have the announcement on Wednesday afternoon around 2:00 p.m. Taper? By how Much? Which securities? The Fed will also release its forecast of economic activity. The Fed has been consistently over-optimistic on economic […]

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

    Why Fannie Mae securities followed bonds lower last week

    Fannie Mae MBS followed the bond market lower. Last week was when most of the Street rolled its April exposure to May. Liquidity has been downright terrible in the TBAs lately.

    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 LT
    Consumer

    Next week’s FOMC statement will be the only market-moving data

    After a heavy week, bonds have an easier schedule After last week’s flood of data, bonds will get a bit of a break. The minutes from the FOMC meeting have the potential to be market-moving. Earnings-wise, the retailers dominate the news—although we’ll get a read on the luxury end of the housing market when Toll […]

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

    How the government shutdown will affect interest rates

    Bonds fell slightly and equities rallied on the shutdown. Why? Beltway insiders who were hoping that the financial markets would get the attention of politicians posturing in Washington were disappointed this morning with the S&P 500 futures up 7 points pre-open and a sanguine outlook from the bond market. Stocks rallied throughout the day, with […]

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

    Leverage and mortgage REITs – Part 2

    Leverage and Mortgage REITs – Part 1 How a mortgage REIT typically does it Most mortgage REITs use repurchase agreements to fund their balance sheet. A repurchase agreement (repo) is basically a secured loan. The REIT will pledge the mortgage backed securities they just bought as collateral for a loan. It is actually an agreement […]

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

    Understanding American Capital Agency versus peers like Annaly

    American Capital Agency (AGNC) is a diversified agency mortgage REIT that invests all across the agency mortgage-backed security (MBS) space.

    By Brent Nyitray, CFA, MBA
  • uploads///GDP
    Consumer

    Earnings deluge on tap: Must-know releases to follow this week

    Economically, we don’t have anything really market-moving, although the GDP number could move markets. This is the second revision to fourth quarter GDP.

    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///MR HAMP
    Financials

    Why the slight HAMP increases in August are negative for REITs

    The Obama Administration is considering expanding the HARP program, meaning agency REITs will face a massive increase in prepayment speeds.

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

    Why MFA Financial benefits from increasing real estate prices

    Over the past 12 months, MFA has paid a dividend yield of over 20% when you take into account two special dividends.

    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/// year bond yield historical
    Financials

    Recommendation: Don’t read too much into the emerging market selloff

    Bonds have been rallying as emerging markets sell off. Does a sell-off in emerging markets change the Fed’s decision-making regarding tapering?

    By Brent Nyitray, CFA, MBA
  • uploads///AGNC dividend
    Real Estate

    American Capital Agency’s 3rd quarter earnings: Company overview

    American Capital Agency is one of the biggest REITs in the U.S. by market capitalization. Annaly Capital Management is the other. As such, AGNC is one of the biggest ultimate lenders in the mortgage market.

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

    TBAs were flat and the 10-year bond rose 1 basis point last week

    The ten-year bond yield rose 1 basis point last week, and TBAs were flat. Bonds had been benefiting from the “risk-off” trade.

    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///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

    Jobs releases and Ukraine tensions hit Fannie Mae TBAs and bonds

    The ten-year bond yield rose 15 basis points last week, so it’s no surprise that Fannie Mae TBAs got hit. Bonds had been benefiting from the “risk-off” trade,

    By Brent Nyitray, CFA, MBA
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