Navigating Contradictions: Insights from the 2025 Q2 Earnings Call on Leverage, Strategy, and Market Conditions

Agency MBS Investments:
- ARMOUR Residential REIT maintains a portfolio concentration in Agency MBS with ROEs in the 18% to 20% range.
- The focus on higher coupon MBS, particularly 5.5 and 6 coupons, is driven by favorable prepayment profiles and the expectation of a steepening yield curve.

Hedge Book and Duration Management:
- The company's hedge book consists of approximately 33% in treasury shorts and futures, with the remainder in OIS and SOFR swaps.
- This balance reflects a bullish steepener view and dynamic adjustments to duration risk, particularly in response to curve steepness beyond the 10-year point.

Funding and Capital Raise:
- ARMOUR Residential REIT raised approximately $104.6 million of capital during Q2 and an additional $58.8 million since June 30.
- This capital raise was achieved through an at-the-market offering program,with issuances being mildly dilutive.

Liquidity and Leverage Strategy:
- The company maintains strong liquidity at approximately 52% of total capital.
- ARMOUR is comfortable with its leverage level and anticipates potential increases due to historically attractive spreads and stable liquidity conditions.