Company: NLY-PF
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001628280-25-036724
Chunk: 6

Company: ANNALY CAPITAL MANAGEMENT INC
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 2
Chunk 6
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 a slowing labor market, and declining confidence seem to weigh on spending behavior. Consistent with forward-looking surveys, investment activity also declined during the quarter but is expected to rebound somewhat in the second half of the year. 

The supply and demand for labor have remained in balance. According to the Bureau of Labor Statistics, seasonally adjusted total non-farm payroll employment rose by 449,000 workers in the second quarter, well above the 333,000 workers added in the first quarter. The unemployment rate ended the quarter at 4.1%, the lowest monthly reading since February, as more people left the labor force than ultimately were unable to find employment. At the same time, wage growth, as measured by the year-over-year change in Average Hourly Earnings, dropped moderately to 3.7% from 3.9% in the first quarter.

Inflation readings, as measured by the year-over-year changes in the Personal Consumption Expenditures (“PCE”) Price Index, remain above the Fed’s 2% inflation target, and disinflationary progress remains gradual. Total PCE prices over the 12 months ended in May declined marginally to 2.3% compared to the 2.5% recorded by the same metric in March while core PCE inflation, which excludes volatile food and energy prices, fell from 2.8% in March to 2.7% in May. Progress on inflation in the second quarter was uneven with core PCE goods prices showing modest early pressure from the tariffs in certain categories while core PCE services inflation slowed. Of note, shelter prices have continued to moderate with the annual rate of inflation in this category reaching levels last seen in early 2022 – a positive development given the large importance of shelter inflation and 

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

the lagged, slow-moving methodology used to incorporate shelter inflation into the headline index. That said, the forecast remains uncertain due to the most significant increase in the effective tariff rate in decades. 

The Fed conducts monetary policy with a dual mandate: full employment and price stability. Given the slow progress on inflation and the resilience in the labor market, the Federal Reserve Open Market Committee (“FOMC”) kept the target range for the Federal Funds rate unchanged at 4.25% - 4.50% at their June meeting, marking their fourth pause since cutting rates by 100 basis points at the end of last year.