AGNC Investment Dep Shares 1/1000 Cumulative Series G

AGNCL

U.S. equity markets rallied to fresh record-highs this past week as investors leaned into rate cut expectations following a wave of soft employment data and a Federal Government shutdown. For the fourth time since 1995, the federal government entered a partial "shutdown" after the U.S. Senate failed to reach the 60-vote threshold required for passage of appropriations. Defering to experience from prior shutdowns in 2013 (16 days) and in 2018 (35 days), markets largely shrugged off the latest Congressional impasse, with investors still anticipating a timely resolution.

Agency mREITs capitalized on wide mortgage spreads by issuing equity and buying agency-backed mortgages, leading to significant mark-to-market gains as spreads tightened. Dynex and AGNC Investment expanded portfolios via equity issuance, benefiting preferred shareholders through increased equity cushion, though common shares face dilution. AGNCZ, AGNC's new Series H preferred, offers an 8.75% yield and is attractive for income investors; Armour and Two Harbors preferreds also present upside potential.

Banks don't hold the loans they originate on their balance sheet; that would result in severe limitations to their lending. We dive into the history of mortgages and explain how home ownership became accessible for millions of Americans. We discuss preferred securities of popular agency mREITs that pay significant, well-covered dividends.

U.S. equity markets climbed to fresh record highs this week despite a jump in producer prices, but consumer inflation remained "cool enough" to keep the Fed on-course for September rate cuts. Despite the inflation uptick in July, all three major CPI and PPI metrics remained below the annualized levels seen in January preceding the initial wave of tariffs. Ahead of the Chair Powell's "farewell tour" in Jackson Hole, the inevitability of significantly easier monetary policy by mid-2026 - at the latest- has fully taken hold in recent weeks.

We take a look at the action in preferreds and baby bonds through the fourth week of July and highlight some of the key themes we are watching. Preferreds market remained stable with credit spreads at relatively tight levels. Agency mortgage REITs like DX, AGNC, and NLY increased common equity, significantly boosting equity/preferred coverage and making their preferreds especially appealing at ~9.5% yields.

U.S. equity markets fell sharply this week, while benchmark interest rates retreated to three-month lows, after revised employment data showed that job growth was far weaker than initially reported. The BLS payrolls report showed softer-than-expected hiring in July and the steepest two-month downward revisions to jobs growth since 2020, raising concern that the Fed may be "behind the curve." The downward revisions came days after Fed Chair Powell used it as the primary evidence for "solid" labor markets, which justified the FOMC's decision to keep rates in "restrictive" territory.

U.S. equity markets retreated from record highs this week after the White House reignited its tariff offensive with a wave of aggressive levies and additional punitive threats. While inflation data has indicated that the 10% tariffs were efficiently absorbed, the pivot back towards Liberation Day tariff levels raises concern that recent deflationary offsets may be overwhelmed. After closing at record highs for two straight weeks, the S&P 500 retreated by 0.3% this past week, trading in a relatively tight trading range as investors geared up for earnings season.

Not all REITs are worth buying. I highlight three popular REITs to avoid. I then present a few better alternatives to buy.

US equity markets posted modest declines this past week after the Federal Reserve held rates steady and maintained its status quo "wait-and-see" approach, but acknowledged heightened inflation and labor market risks. Meanwhile, White House officials headed to Switzerland to begin high-level trade talks with China, which follows the announcement of the first major post-Liberation Day trade deal with the United Kingdom. Following its best two-week stretch since late 2022, the S&P 500 slipped 0.4% this week - extending its drawdown to around 8% from its mid-February record highs.

US equity markets steadied this past week while bond markets rallied as investors parsed a surprisingly solid slate of economic data and a decent start to corporate earnings season. Early week gains were pared following comments from Fed Chair Powell regarding the inflationary impact of tariffs and the reluctance of the Fed to step in to support markets. The hawkish comments sparked a series of blistering critiques by President Trump, accusing the Fed Chair of "playing politics" and posting that his "termination cannot come fast enough."