Why Shares of AGNC Investment Corp Are Rising Today
Shares of the mortgage real estate investment trust (mREIT) AGNC Investment (NASDAQ: AGNC) are trading nearly 3% higher as of 10:04 a.m. ET today after getting an endorsement from Bill Gross, also known as the Bond King.
As an mREIT, AGNC uses debt and leverage to invest largely in agency mortgage-backed securities, which carry a guarantee from the U.S. government. But these bonds can still lose value if interest rates rise, which has happened rapidly this year as the Fed has tried to combat high inflation.
Bond values have an inverse relationship with bond yields, so as yields have risen, bond values have been crushed. In the industry, investors refer to what has gone on this year as mortgage spreads (the difference between the yield on a 30-year mortgage and a yield on the 10-Year U.S. Treasury) widening, and spreads not too long ago widened to levels not seen since the Great Recession.
Source Fool.com
