FEDERAL RESERVE TAPERING WILL STEEPEN YIELD CURVE. GOOD FOR NLY.
The Federal Reserve will be reducing their purchases (tapering) of long term bonds. That will cause those bonds to decrease in price and go up in yield. Thus the yield curve will steepen which is good for NLY. As the economy improves The Fed will continue to decrease long term bond purchases and the yield will go higher still.
Can you pls explain your argument and think about what you write? I am as they say 'in the business' and what you wrote is the exact opposite of what will happen to NLY price. Yield Curve steepening is a horror show for NLY price because they already own so many long term notes. Its a disaster for them.
Unfortunately, portfolio maturity is mostly relatively long term. While new issues will be at higher yield, existing portfolio will have lower market value. Given that portfolio is highly leveraged, lenders will decrease allowed leverage to a multiple of new lower portfolio. Thus, bias toward portfolio shrinking and not growing as rates go up- Stock will be hurt by rising rates. Part of this already reflected in stock price--this year's price drops partially in anticipation of rising rates.
in the past 10 years, NLY has traded between $16 and $20 when the TNX was between 4% and 5%. They have always found a way to make money. just hold and collect 10%+ dividends. and ignore the fear mongerers.