Mortgage Market Drop Requires Scrutiny

I wrote about Armour Residential (ARR) on May 20, and in the last two trading days the shares have been under heavy pressure. As an investor, the following steps need to be taken before any buy/sell actions:

Find out what is causing the decline. In this case the culprit was a sharp decline in Treasury prices Wednesday morning, continuing Tuesday's decline. Strong economic data reignited fear the Fed will taper its QE3/QE4 bond-buying regime. That drove a decline in the mortgage-backed market, as MBS prices followed the trajectory of the swoon in Treasuries (see Chart). ARR's portfolio is composed entirely of Agency MBS....524 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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