Ellington Residential initiated with a Hold at JonesTrading

JonesTrading analyst Jason Stewart initiated coverage of Ellington Residential with a Hold rating without a price target. The analyst expects book value appreciation to be driven by a tighter agency mortgage basis, though he expects "bouts of elevated volatility" in the first half of 2023. He turned constructive on the medium-term outlook for agency mortgage real estate investment trusts. Fixed income volatility is set to decline as the Federal Reserve approaches cycle terminal fed funds rates, which should tighten the mortgage basis through 2023, albeit not linearly, Stewart tells investors in a research note. He says high quality, liquid assets should perform well against this backdrop.