Company: NLY-PF
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001628280-25-036724
Chunk: 145

Company: ANNALY CAPITAL MANAGEMENT INC
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 1
Chunk 145
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Market Risk Management64Credit Risk Management65Counterparty Risk Management66Operational Risk Management66Compliance, Regulatory and Legal Risk Management68Critical Accounting Estimates68Valuation of Financial Instruments68Residential Securities68Residential Mortgage Loans69MSR69Interest Rate Swaps69Revenue Recognition69Consolidation of Variable Interest Entities70Use of Estimates70Glossary of Terms71

37

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIESItem 2. Management’s Discussion and Analysis 

Overview

We are a leading diversified capital manager with investment strategies across mortgage finance. Our principal business objective is to generate net income for distribution to our stockholders and optimize our returns through prudent management of our diversified investment strategies. We are an internally-managed Maryland corporation founded in 1997 that has elected to be taxed as a REIT. Our common stock is listed on the New York Stock Exchange under the symbol “NLY.”

We use our capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on our assets and the cost of our borrowings and hedging activities.

For a full discussion of our business, refer to the section titled “Business Overview” in our most recent Annual Report on Form 10-K.

Business Environment 

The U.S. economy faced considerable uncertainty in the second quarter of 2025 (“Q2 2025”), but the Trump Administration’s policy changes and related market volatility – primarily following the tariff announcements in April – have had a smaller impact on labor markets and economic growth than many market observers had anticipated. While hiring has slowed relative to the pace of recent years, employers hired enough workers to lower the unemployment rate marginally to 4.1%. Conditions point to balanced labor supply and demand, while layoffs remain muted. 

Meanwhile, economic growth rebounded from the modest contraction in the first quarter (“Q1 2025”), as global trade flows presented less of a drag on domestic economic activity in Q2 2025. Looking at the first half of the year, the U.S. economy is likely expanding at roughly a 1.0% annualized rate, one-third of the real growth pace seen in 2023 and 2024, though far from an outright economic contraction. Inflation moderated in Q2 2025, running 2.5% on a seasonally adjusted annualized rate (“SAAR”) in the quarter, well below the 3.5% SAAR seen in Q1 2025. The slowdown was driven