Trevor Cranston: Great. Okay, that’s helpful. Thank you.
Operator: Thank you. Next we’ll go to Douglas Harter with Credit Suisse. Your line is now open.
Douglas Harter: Thanks. Can you just talk about the — how you are sizing the ability to continue to add leverage to the portfolio, kind of, as you see these buying opportunities?
Smriti Popenoe: Yes. Yes, so Look from the end of the year, we — I believe we closed the year at 6.1 times leverage to total capital. Rob, correct me if I’m wrong?
Rob Colligan: Correct. A – Smriti Popenoe So we are up from that list and I think over time, you’ve seen our balance sheet flex up and down based on spreads and other factors. At this point, you know, I — we’re still of the view that the investing environment is good enough, that there’s more room for us to be able to add leverage here, two to three more turns at this point and still be well within our long-term, sort of, risk reward parameters, okay? What’s preventing us from running the highest amount of leverage at this point is, like, just this idea that, you know, we’re not out of the woods yet globally. We have still a fair amount of play, you know, between inflation and growth and geopolitical factors and other things, where you could get surprised one way or the other.
So we’ve been very methodical about saying, you know, this is the amount of risk, I think this environment can sustain. Is it possible for us to take on more risk? And over time, you know, that will pan out for our shareholders, because of our intermediate view, absolutely, right? But it’s something that we’re not taking lightly just given all the other factors. But there’s no question if we feel like there’s certainty around any of these things, you know, like the curve gets steeper or we get some, kind of, the flat fat tail distribution doesn’t look so flat or fat in terms of the tails, and that’s the time to make that decision.
Douglas Harter: All right. Appreciate that. And a few times you’ve referenced spreads relative to the kind of seven-year treasury. Could you just talk about what it is that has you referencing that point on the curve?
Smriti Popenoe: Nothing in between. Basically the — a big part of the mortgage coupon stack is below par Doug. So, like, our assets on average, the market value of our assets is, like, $95 price, I think, thereabouts. So those assets tend to be longer in duration, right? Have more stable cash flows just, because they’re not — they don’t have that prepayment option that’s in the money right now. And that area of the curve is more commensurate with where the cash flows are. So we tend to look at things either directly versus the seven-year part of the curve or versus a blend of the five and the 10-year and often that, that ends up being there. If you’re looking at higher coupons like [Indiscernible] accounts something like that, it would be more appropriate to look at maybe a lower point on the yield curve, like, the five-year treasury, for example.
Douglas Harter: Got it. Appreciate it. Thank you.
Smriti Popenoe: Sure. Of course.
Operator: Okay, next we’ll go to Bose George with KBW. Your line is now open.
Bose George: Hey, everyone. Good morning. Just wanted to ask about where you think book value is quarter-to-date?
Smriti Popenoe: Yes. So quarter-to-date, our book value down about 1%, and it’s traded in a relatively tight range even though mortgages are wider, and rates have been bouncing around [Multiple Speakers]
Bose George: Okay, great. Thanks. And then just in terms of the current, you know, given the current spreads, where are the ROEs just given your leverage in the, kind of, the high-7s?
