I guess investors forget that AGNC hedges aggressively. A 90+% hedge ratio with longer dated swaps and swaptions, short Treasuries, etc. Basis risk has been a big BV killer during the past few months but spreads are back to an attractive level (much wider than pre-QE3) which bodes well for better performance in MBS vs. Treasuries and out of the hedges, which are benefiting from the decline in Treasuries (with swaptions finally kicking in after the 50 bps move in rates that we had).
It's all about mortgages outperforming Treasuries from here. Take a look at AGNC's BV performance in 1Q 2012 when the 10-yr went to 2.40%. AGNC did just fine.