the writer is only stating the facts. The only thing that has kept NLY trading up these last few weeks was the high oil price. Some believed as long as oil is high then the fed may not raise rates (bullshit). This argument is now falling apart and NLY is now starting to move inversely the treasury yields.
If a weak employment report is out today then treasury yields should turn south but it will not be long lived. The market has a bullish tone at present and after a few days the employment figures will be considered not as bad as orginally thought, and guess what yields will start rising again. I believe the next FOMC decision is 12th dec and this will increase pressure on yeilds.
I believe the us economy will continue to grow in 2005 and rates will end up eventually 4.5 - 5%. Where does that put the 30 year bond yeilds and NLY price. NLY should be played from a leaps long put and possibly short the 20 call. This thing could easily end up at about 12 within the year. The good thing is due to the nature of ecomomic cycles it will eventually return to 20.
Just before the economic cycle has gone full circle and rates start falling will be the best time to own NLY.
I held NLY for a couple of years and agree that this is a great company. However, the spread compression between the 2 and 10 yr concerns me. I sold NLY a couple of days ago but still like MREITS, owning FBR, NFI, IMH and AHM. After following the FBR conference on MREITS, I'm basically staying with originators.