Concerns raised by the debt ceiling debate present minimal potential short-term risks for REITs that invest in agency MBS, and the sector should be viable under all “reasonable” scenarios, according to a new report from Keefe, Bruyette & Woods (KBW).

KBW said the one negative scenario that is increasingly likely -- but still considered a relatively low risk -- is one where an agreement is reached on the debt ceiling but sovereign debt is still downgraded. Another likely outcome is an agreement reached without a debt downgrade.

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