AGNC Investment Gets Dinged by the Fed, But It's Optimistic About the Future

There has been a sea change in investor sentiment in the bond market lately as inflation has picked up. The consumer price index rose 7% on an annualized basis in December, which was the highest rate since 1982. Investors have increased their bets that the Fed will be more aggressive, with many expecting it to hike the federal funds rate by 125 basis points in percentage this year.

In addition, the Fed signaled that it would begin to reduce its holdings of mortgage-backed securities. While this means a rough road ahead for agency mortgage real estate investment trusts (REITs) like AGNC Investment (NASDAQ: AGNC), the worst may be behind it. 

The Federal Reserve building. Image source: Getty Images.

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Source Fool.com