Anworth Mortgage Asset Corp (ANH)

This is another AMBS investor that is killing it with the currently steeply inclined yield curve. I just can't see that changing any time soon. Short-term rates are anchored at next to nothing until the economy improves, making AMBS investing companies a great hedge until conditions get better. The fact that congress is looking at making changes to Fannie and Freddie may be making people nervous about the model of companies that invest in their paper. I'm not too worried. All the suggestions for change made by the recent GAO report, which is what congress is following, would produce gradual changes, if any. My guess is that they will tweak the agencies' model to make them more stable, but will not produce radical change. That would be too risky for lenders and the recovery. Regardless, there will continue to be a secondary market for mortgages, government-backed or not, and the companies that supply it with capital, like ANH, will continue to profit as long as the yield curve remains favorable, keeping their spreads intact. That, to me, is THE thing to keep an eye on!