What a Kevin Warsh-Led Fed Could Mean for Mortgage REITs AGNC and Annaly Capital

New Federal Reserve Chair Kevin Warsh held his first FOMC meeting with rates held steady at 3.5%-3.75%, signaling a shift toward potential rate increases rather than cuts. This creates near-term headwinds for mortgage REITs like AGNC and Annaly Capital through declining tangible net book value, but could benefit them longer-term as new investments yield higher returns. Warsh's plans to shrink the Fed's balance sheet and examine its operations may widen mortgage security spreads, pressuring valuations initially but improving future profitability.