The Fed's cache of MBS has mushroomed to nearly $1 trillion since the Great Recession began in 2008. If the unemployment rate in the U.S. falls below 6.5%, the Fed and Bernanke could change their minds about the exit strategy for its heavy MBS load.
Bernanke didn't rule out the possibility of raising interest rates ahead of schedule, but did say, "I don't see any radical shift in the way this is going to happen," when he spoke before the
House Financial Services Committee
He commented on the ongoing unacceptable unemployment numbers and it left me believing that he and the Open Market Committee aren't ready to abandon their accommodative monetary policies anytime in the foreseeable future. He even guess-timated that unemployment wouldn't fall to 6% until 2016.
This bodes well for interest-rate-sensitive investments like REITs and greatly reduces the anxiety some have felt about mortgage REITs like NLY and AGNC. I'm planning to average into shares carefully and let the share price come to me.
As of the time of publication the author is only long shares of AGNC but not any other of the companies mentioned in this article.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.