2024-02-24 06:05:30 ET
Summary
- Dynex Capital's solid run looks set to come to an end.
- We think a lower yield curve level will occur and inflict losses on its asset base due to its negative duration.
- Dynex's positive spread duration could be another risk as we foresee a slowdown in the economy and an inverse relationship between the yield curve and credit risk occurring in due course.
- Key metrics show that this MREIT is undervalued on a trailing basis and provides an illustrious dividend. However, our outlook juxtaposes retrospective data and paints a bearish picture.
It's been a few months since we covered Dynex Capital (DX) . Since then, the mortgage REIT has performed staggeringly well. Sure, much of its momentum has been due to a broad-based market upturn. Nevertheless, Dynex has returned well for a fixed-income asset....
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Dynex Capital: Unfavorable Spread Changes Look Set To Occur