We believe that the mortgage REIT sector has been propelled by yield starved investors and backed by an MBS consuming Fed. While current (and near-term projected) rates will not mollify the yield hungry, the role of the Fed will be changing.
The largest buyer of agency MBS is going on a diet, leaving the market to absorb additional supply.
Mortgages continue to trade at tight spreads.
Our thoughts on the landscape and recommendations.