GPMT - Mortgage REITs face downward pressure as Treasury yields edge up

2023-04-10 14:54:45 ET

Shares of mortgage finance firms came under some selling pressure in Monday afternoon trading as U.S. Treasury yields rose across the curve.

Mortgage REITs (as of 2:54 p.m. ET): Annaly Capital Management ( NYSE: NLY ) ( -2.2% ), AGNC Investment ( NASDAQ: AGNC ) ( -3.3% ), Chimera Investment ( NYSE: CIM ) ( -3.1% ), Two Harbors Investment ( NYSE: TWO ) (-2.7% ), Orchid Island Capital ( NYSE: ORC ) ( -2.4% ), Dynex Capital ( NYSE: DX ) ( -3.2% ), Ellington Financial ( NYSE: EFC ) ( -1.4% ), and AG Mortgage Investment Trust ( NYSE: MITT ) ( -4.6% ).

Rising interest rates generally are a negative for REITs as the result of such a move is decelerating real estate values and a higher cost of debt. At the time of writing, the 10-year UST yield ( US10Y ) perked up three basis points to 3.41%, and the two-year ( US2Y ) rose three bps to 4.00%.

Commercial mortgage REITs also slid during the session, with the biggest decliners featuring Blackstone Mortgage Trust ( NYSE: BXMT ) ( -3.1% ), Brightspire Capital ( NYSE: BRSP ) ( -2.9% ), Arbor Realty Trust ( NYSE: ABR ) ( -2.8% ) and Granite Point Mortgage Trust ( NYSE: GPMT ) ( -2.4% ). Of note, office and apartment REITs experienced weakness, too.

Meanwhile, most homebuilder stocks, including D.R. Horton ( DHI ) ( +0.5% ), Hovnanian Enterprises ( HOV ) ( +1.3% ) and Beazer Homes ( BZH ) ( +0.9% ), changed hands in the green.

The bearish price action coincided with a weaker stock market as Good Friday's strong jobs report bolstered the case for at least one more rate increase by the Federal Reserve.

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