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American Capital Agency Corp. Message Board

  • getrich9800 getrich9800 Feb 5, 2013 1:29 PM Flag

    What Happens to AGNC when Interest Start Climbing ???

    What Happens to AGNC Stock Price and Divy % Rate ???

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    • Which interest rate?

      It matters - a lot. If you're talking about 'housing interest rates' you need to have a look at the 10year as a measure. Short term interest rates would cause spread compression, but that is not what I'm seeing so far in FY13.

      If the 10-year moves upward, and the short term interest rates stay where they are, or rise at lower pace than the 10-year, spread income will increase. This will have two effects:

      1) The company will be more profitable
      2) The company's book value will go down

      These two effects are inverses of each other.

      The market seems to favor REITs a little more when they are profitable versus a higher book value. This can be seen in other REITs (as well as this one), as a discount to book value today. When the day comes that spreads increase, the market will likely trade the shares at a premium rather than a discount.

      I hope this helps!

      Warlord

    • Fear mongers prevailed last Nov. after election and again at end of year, and price went below 29. It was a buying opportunity. As long a Bernanke is in (term ends in January 2014), interest rates are not going anywhere.

      • 1 Reply to gman310
      • ----------------------------------------------
        As long a Bernanke is in (term ends in January 2014), interest rates are not going anywhere.
        ----------------------------------------------

        Yup, and you have two more Doves comming in when the seats change.
        And probably the head of the San Francisco Fed will become the new fed chair, and she is dovish as well.
        So even when Bernanke steps down, things should just stay the course.

    • Hard to tell. Long term rates are projected to rise before short term.
      So you might actually get a pop before things go back to normal when shrot term rates rise.

      It all just depends on what the spread ends up being.

      Most predictions I see are like this.
      QE's start to end / wind down in Q1 2014.
      Feds short term rates start to rise in Q3 2015.

    • PPS will tank on fear and then rise to what investors think its worth.

 
AGNC
23.57+0.06(+0.26%)11:35 AMEDT

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