Surprise! Mortgage REITs Are Kicking Butt Since the Fed Started Raising Rates

In December 2015, the Federal Reserve announced a shift that the U.S. economy and stock market hadn't seen since 2006. For the first time in practically a decade, the Fed raised its federal funds target rate by a quarter of a point. The move wound up pushing its target rate from an all-time record low of 0%-0.25%, where it sat for seven full years, to 0.25%-0.5%. Since then, the Fed has enacted three additional quarter-point hikes.

Monetary tightening usually comes with a push-pull for the U.S. economy and stocks. Higher interest rates often provide a cooling mechanism for inflation and growth, since it becomes costlier to borrow money. This reduces the incentive for businesses to borrow in order to expand, reinvest, or perhaps acquire new businesses. Yet, at the same time, monetary tightening is needed because the economy is growing at a steady pace. There are two sides to this coin.

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Source: Fool.com