Why would anyone want to buy a 30 yrs fixed investment leverage 8 to 1 in a rising int. rate environment? In Japan today, short term rates are surging again. Mortgage went from 3 to 4% in a month and now experts saying 5-6% by year end is very possible, with or without FED easing. The global markets are now taking over the pricing of debt and they are doing a much better job. Since, global powers are driving rates higher, their strategy is to deflate their currency to boost a sagging economy in China, Japan and Europe. Hence, the dollar will decline in relation to these currencies and will continue, FED is powerless, THE WORLD IS TOO HUGE and the LARGE SMART INVESTORS are too smart. Sorry, the M-REIT's are going to be TOAST and the smart money is going to load up trillions shorting them to the ground like Bimini Capital (BMNM). Once these high flying high levered M-REIT's get below a dollar and yield 20%, that is the time to load up the truck and collect the cash flow and trade them. You could have tripled your money in BMNM from 10 cent to 30 cents this past twelve months, in fact you could have done this 3 times, that is 900%. The collapse will be a gold mine for those who understand what is going on. DON'T BELIEVE BEN, TRUST IN THE FACTS.
1. no longer leveraged 8x1 more like 6x1 (less)
2. Long term rates rising yes and short term rates will stay the same for at least 2yrs.
3. US economy is still in the #$%$.er because after all this QE the only jobs being created is part time min. wage jobs (look it up).
4.Mortgage rates go up and the prices of houses will go down. prices of houses go down and there are more people underwater. more defaults, less retail sales, lower GDP.
5. Lower GDP = long term rates go down again and BV goes up
Bottom line, AGNCs spread will increase, this run has another leg.
Be in it or be gone.