Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mortgage REIT Dynex Capital (NYSE:DX) fell 10% today after the company released earnings.

So what: Interest income rose 29.2% from a year ago to $33.0 million, but expenses rose 41% to squeeze margins. Net income did rise from $18.8 million to $29.4 million, which was solid, but investors were expecting more.  

Now what: Long-term interest rates were up during the quarter, which should help mortgage REITs, who borrow at short-term rates. But the rise also lowers the value of the portfolio and can make earnings very volatile. The increase in income is solid, but expect more volatility going forward, especially with uncertainty in interest rates.

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