What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-02-12 compared with 2025-02-13 · 117 added, 93 removed, 145 unchanged (59% of the section changed)

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In previous filings, we included the Bloomberg Mortgage REIT Index, or BBG REIT Index, in the share performance graph and table.

As a result of the discontinuation of the BBG REIT Index in 2024, we have replaced the BBG REIT Index with the Performance Peer Group.

As a result of the discontinuation of the BBG REIT Index in 2024, we replaced the BBG REIT Index with the Performance Peer Group.

The Performance Peer Group represents a group of mortgage REIT peers used by the Management Development and Compensation Committee of our Board of Directors to evaluate our performance and to inform certain elements of our executive compensation program.

We believe that companies included in the Performance Peer Group have portfolios and investment strategies that most closely resemble our focus on residential mortgage assets.

Companies comprising the Performance Peer Group include AGNC Investment Corp., ARMOUR Residential REIT, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial Inc., Invesco Mortgage Capital, Inc., MFA Financial, Inc., New York Mortgage Trust, Orchid Island Capital, Inc., Redwood Trust, Inc., Rithm Capital Corp., and Two Harbors Investment Corp.

Companies comprising the Performance Peer Group include Adamas Trust, Inc., AGNC Investment Corp., ARMOUR Residential REIT, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial Inc., Invesco Mortgage Capital, Inc., MFA Financial, Inc., Orchid Island Capital, Inc., Redwood Trust, Inc., Rithm Capital Corp., and Two Harbors Investment Corp.

The cumulative total return of the Performance Peer Group was weighted according to the respective issuer's stock market capitalization at the beginning of the performance period.

For the five-year period ended December 31, 2023, an investment of $100 at the beginning of the period would have resulted in a value of $93 in our common stock, $98 in the BBG REIT Index, and $85 in the Performance Peer Group.

ANNALY CAPITAL MANAGEMENT, INC.

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Share Repurchase

In January 2025, we announced that our Board authorized the repurchase of up to $1.5 billion of our outstanding shares of common stock through December 31, 2029 (the “Current Common Stock Repurchase Program”).

The Current Common Stock Repurchase Program replaces our previous $1.5 billion share repurchase program, which expired on December 31, 2024 (the “Prior Common Stock Repurchase Program”).

No shares were repurchased with respect to the Prior Common Stock Repurchase Program during the year ended December 31, 2024.

Purchases made pursuant to the Current Common Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.

In January 2025, we announced that our Board authorized the repurchase of up to $1.5 billion of our outstanding shares of common stock through December 31, 2029 (the “Common Stock Repurchase Program”).

The Common Stock Repurchase Program replaces our previous $1.5 billion share repurchase program, which expired on December 31, 2024.

No shares were repurchased with respect to the Common Stock Repurchase Program during the year ended December 31, 2025.

Purchases made pursuant to the Common Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.

The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.

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Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

In January 2025, we announced that our Board authorized a repurchase plan for all of our existing outstanding Preferred Stock (as defined below, the “Current Preferred Stock Repurchase Program”).

In January 2025, we announced that our Board authorized a repurchase plan for all of our existing outstanding Preferred Stock (as defined below, the “Preferred Stock Repurchase Program”).

Under the terms of the plan, we are authorized to repurchase up to an aggregate of 63,500,000 shares of Preferred Stock, comprised of up to (i) 28,800,000 shares of our 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series F Preferred Stock”), (ii) 17,000,000 shares of our 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series G Preferred Stock”), and (iii) 17,700,000 shares of our 6.75% Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series I Preferred Stock”, and together with Series F Preferred Stock and Series G Preferred Stock, the “Preferred Stock”).

The aggregate liquidation value of the Current Preferred Stock that may be repurchased by us pursuant to the Current Preferred Stock Repurchase Program, as of December 31, 2024, was approximately $1.6 billion.

The Current Preferred Stock Repurchase Program replaces our previous repurchase plan for all of our existing outstanding Preferred Stock, which expired on December 31, 2024 (the “Prior Preferred Stock Repurchase Program”).

The Current Preferred Stock Repurchase Program became effective on January 1, 2025, and will expire on December 31, 2029.

No shares were repurchased with respect to the Prior Preferred Stock Repurchase Program during the year ended December 31, 2024.

Purchases made pursuant to the Current Preferred Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.

The aggregate liquidation value of the Preferred Stock that may be repurchased by us pursuant to the Preferred Stock Repurchase Program, as of December 31, 2024, was approximately $1.6 billion.

The Preferred Stock Repurchase Program replaces our previous repurchase plan for all of our existing outstanding Preferred Stock, which expired on December 31, 2024.

The Preferred Stock Repurchase Program became effective on January 1, 2025, and will expire on December 31, 2029.

No shares were repurchased with respect to the Preferred Stock Repurchase Program during the year ended December 31, 2025.

Purchases made pursuant to the Preferred Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.

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INDEX TO ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Environment

Economic Environment

Income Tax Reform

Results of Operations

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Excess Liquidity

Maturity Profile

Maturity Profile and Interest Rate Sensitivity

Stress Testing

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Business Environment

real economic growth remained at its above-trend pace in 2024, marking a second consecutive year of strong U.S.

economic growth despite continued elevated interest rates.

The strength of the U.S.

economy was primarily driven by consumption, as individuals benefitted from robust wage growth and a moderation of inflation pressures.

Government spending also supported economic growth, while investment activity contributed somewhat less than in 2023.

Separately, the U.S.

economy broadly appears to have benefitted from recent strong immigration flows, which helped balance labor market supply and demand, and improved productivity gains.

Financial markets observed a constructive 2024, with equities recording strong returns given the healthy economic picture, best seen in the 25.0% total return for the S&P 500 Index.

Interest rates, however, remained volatile throughout the year, though were generally more rangebound than in 2023.

Ten-year Treasury yields traded in a range between 3.6% and 4.7%, generally narrower than in 2023, when the range was 3.3% to 5.0%.

Nonetheless, interest rates generally remained elevated relative to the period between the 2008 financial crisis and the 2020 pandemic, which has led to increased speculation that the lower interest rates in that period were more of an outlier than a new normal.

For now, the U.S.

economy remains strong, which in turn suggests healthy economic growth can occur even at these higher interest rate levels.

The Federal Reserve (“the Fed”) lowered the Federal Funds Target Rate (“Fed Funds Rate”) in the second half of 2024.

As inflation rates fell from their peak in the summer of 2022 and hiring slowed over the summer months, the risk that a Fed Funds Rate at a peak of 5.25-5.50% would unduly constrain economic growth and the labor market rose.

Consequently, the Fed lowered the Fed Funds Rate by 1% over the course of three meetings between September and December, even though inflation remained above 2% annual rates.

Given continued strength in both inflation and economic activity, Fed officials have signaled a more gradual approach going forward, waiting for further inflation progress to lower the rate further.

Regarding their balance sheet policy, the Fed slowed the decline in their securities portfolio mid-year by reducing the cap on Treasury securities runoff from $60 billion per month to $25 billion.

Combined with the decline in their mortgage-backed securities portfolio, the Fed’s security portfolio declined $668 billion in 2024 and continues to decline at a $60 billion per month pace.

Of note, given the lower Fed Funds Rate and relatively less movement in long-term Treasury rates, the yield curve steepened, with the 2-year 10-year Treasury spread, the difference between yields of those maturities, turning positive for the first time in over two years.

In addition, long-term Treasuries appeared increasingly driven by investors’ increased demand for compensation to hold longer maturity securities, with rising term premia driving much of the increase in long-term Treasury yields seen in 2024.

Additionally, the U.S.

presidential election outcome amplified the rise in term premia, as expectations for a permanent extension of the 2017 “Tax Cuts and Jobs Act” was estimated to further increase the U.S.

budget deficit according to estimates by the Congressional Budget Office.

Meanwhile, residential investment slowed as high mortgage rates curbed demand for housing and housing construction, particularly in the second half of the year.

In this economic environment, the housing market saw limited changes in aggregate as inventories and activity remain subdued relative to the pre-pandemic averages, which supported home prices.

National home prices rose roughly 3.0% in 2024.

Historically low affordability for prospective homeowners, as mortgage rates remained above

The year 2025 saw a meaningful shift in U.S.

policy by the second Trump Administration, though the economy saw less impact in aggregate than many had expected early in the year.

The Trump Administration pushed changes in several different areas, most notably tariffs on U.S.

goods imports, which led to $288 billion in U.S.

customs revenues in 2025, nearly three times the average customs revenues of prior years.

In addition, Congress passed the One Big Beautiful Bill Act (“OBBB”), effectively extending the majority of the 2017 Tax Cuts and Jobs Act provisions, while offering some additional benefits, including an elimination of taxes on tips and Social Security for some taxpayers.

The tax reform passage has buoyed business sentiment and is expected to support investment growth and consumption, mainly through higher tax refunds in the first part of 2026.

Finally, the Administration strictly enforced immigration laws and drove efforts to deport more immigrants without proper documentation, which appears to have been one of the factors weighing on the labor market.

employment growth slowed meaningfully in 2025, while the unemployment rate rose slightly to 4.4%.

economic growth, however, remained robust, with the economy growing 2.5% at a seasonally adjusted annualized rate (“SAAR”) in the first three quarters, above expectations for growth coming into the year.

Growth was once again driven by consumption, as consumers showed little pause amid declining sentiment and higher prices from tariffs.

Of note, the tariff pass-through to consumers has been slower than most economists expected, though goods inflation increased over the year.

Aggregate inflation, as measured by the Consumer Price Index excluding food and energy prices, has moderated somewhat over the course of 2025, with the year-over-year (“yoy”) rate falling from 3.21% to 2.65%.

Meanwhile, the housing market remained relatively weak as measured by aggregate activity levels, with existing home sales averaging 4.1 million annualized units per month in 2025, essentially in line with 2024 activity levels, while new home sales remained subdued.

In an environment of modest increases in supply, but continued challenged affordability, home prices were little changed for the U.S.

in aggregate, rising 0.10% yoy according to Zillow albeit with meaningful regional disparities.

For example, many southern and western states saw continued rise in supply on top of already elevated inventory levels, leading to larger declines in home prices.

Meanwhile central states typically saw steadier inventory levels and therefore enjoyed price appreciation above the national average.

Similar to 2024, when the Fed lowered the Federal Funds Target Rate (“Fed Funds Rate”) in the second half of the year, a weaker labor market and rangebound inflation allowed the Fed to further reduce monetary policy rates.

With the Fed Funds Rate reaching a range of 3.50-3.75% at the December Federal Open Market Committee (“FOMC”) meeting, officials have signaled a more gradual approach going forward, waiting for additional economic data to lower the rate further.

Regarding its balance sheet policy, the Fed ended the $2.4 trillion decline in its securities portfolio in December 2025 by announcing purchases of Treasury bills starting at $40 billion per month.

The purchases are designed to maintain a stable ratio of reserves to nominal gross domestic product (“GDP”) of around 10% and alleviate funding rate volatility, which had occurred around quarter end and Treasury security settlement dates.

Fixed income markets ultimately saw a rangebound trading environment that allowed for strong returns, with the Bloomberg Aggregate U.S.

Bond Market Index registering a 7.3% total return in 2025, the strongest annual return since 2020.

ANNALY CAPITAL MANAGEMENT, INC.

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Management’s Discussion and Analysis

6.0% for nearly the entire year and existing homeowners’ inability to move homes without a meaningful increase in housing costs (the so called “lock in effect”), have supported home prices at low levels of sales turnover.

However, there has been increased regional differentiation, with larger growth in supply in states and cities in the Southern and Western United States, which in turn saw price changes below the national average.

Areas of home price weakness generally correspond to areas with easier zoning restrictions and greater ability to build new homes, though many of them also saw more notable price increases following the pandemic driven by housing shortages and outsized population growth.

In this environment, Annaly generated an 11.9% economic return in 2024, underscoring the efficacy of our diversified housing finance model and our disciplined portfolio and risk management.

We proactively managed our leverage profile throughout the year, reducing aggregate leverage modestly from 5.7x at the end of 2023 to 5.5x at the end of 2024.

Similar to 2023, a portion of the reduced leverage is driven by further diversification into the Residential Credit and mortgage servicing rights (“MSR”) businesses, which now represent 2 percentage points more of our capital than at year end 2023.

Both businesses are less levered than Agency MBS.

Finally, as a result of constructive financial markets, we were able to raise $1.6 billion in accretive equity capital over the course of the year.

Given the increased capital base, Annaly’s aggregate portfolio grew to $80.9 billion as of December 31, 2024, up roughly $6.5 billion relative to the same date a year earlier.

Of note, we grew assets and capital in each of our three businesses.

The Agency MBS portfolio grew its assets to $70.6 billion as we added a modest amount of assets across the major asset classes in the portfolio.

The increases were focused on our continued purchases of prepayment protected Agency MBS specified pools in production coupons, which added attractive cash flows that also offered prepayment protection.

In addition, Annaly began to hold a larger balance of “to be announced” (“TBA”) securities after holding a modestly negative balance at the end of 2023, though at $3.1 billion, our TBA position remains small relative to recent years.

This smaller share is largely a function of the continued unattractive financing conditions in the TBA market relative to repurchase agreement (“repo”) funding of specified pools.

In addition, larger loan sizes have left TBAs with elevated prepayment risks.

Finally, Annaly modestly increased our portfolio of Agency commercial mortgage-backed securities to $3.3 billion market value as the asset class continues to offer an attractive stable cash flow in volatile interest rate markets.

Our Residential Credit business portfolio continued to grow strongly driven by Annaly’s residential whole loan acquisition strategy, through which the business acquired $13 billion in loans, predominantly through our correspondent channel.

The strategy continued to allow us to control all aspects of the loan making process, including asset selection, counterparties and loss mitigation.

Extracting favorable economics and long-term non-recourse financing, our Residential Credit business issued a record 21 securitizations under Annaly’s Onslow Bay (“OBX”) shelf in 2024, worth a total of $11.0 billion.

Given the stable housing market, a strong network of counterparties and robust demand for residential credit assets, we expect to continue to grow the strategy in 2025.

Finally, Annaly also continued to grow its MSR strategy, further increasing assets through purchases predominantly of low-coupon bulk MSR packages, growing the portfolio to $3.3 billion market value.

Annaly continued to opportunistically buy MSR bulk packages, which generally saw healthy demand into somewhat lower trading volumes than in 2023.Our strategy continued to focus on predominantly low coupon, high quality MSR.

The current weighted average note rate of the MSR portfolio is 3.20%, up only slightly from a year ago and well below prevailing mortgage rates at the end of 2024.

Economic Environment

In 2024, the U.S.

economy performed strongly, with the gross domestic product (“GDP”) rising by 2.8% on a year-over-year (“yoy”) basis.

This marks the second consecutive year of robust growth, following a 2.9% increase in real GDP in 2023, despite elevated interest rates.

This economic resilience was driven by a strong income growth and sound financial market performance, which generated wealth gains across households.

Consequently, consumer spending made up a majority of U.S.

aggregate demand in 2024.

Personal consumption expenditures rose at a 5.3% annual rate per month in 2024, down from 6.4% in 2024, though slower price gains resulted in stronger inflation-adjusted consumption than in 2023.

The labor force benefited from stable employment and sustained wage growth throughout 2024, with the supply and demand of the labor market now in better balance compared to the end of 2023.

Monthly employment growth slowed but remained in healthy territory, with the economy adding 186,000 in total nonfarm payroll jobs per month in 2024, compared to 251,000 per month in 2023.

The unemployment rate ended the year at 4.1%, increasing only 0.3 percentage points relative to a year earlier, and has remained below 4.3% since November 2021.

Job openings trended lower but remained elevated relative to pre-pandemic averages, while layoffs stayed low.

As a result of the more balanced labor market, wage growth – as measured by the Employment Cost Index - decelerated from a pace of 4.3% yoy at the end of 2023 to a still healthy 3.8% yoy at the end of 2024.

Price pressures moderated throughout 2024, but progress has been slow and inflation is still at levels above the Fed’s 2% target.

The headline Personal Consumption Expenditure Chain Price Index (“PCE”), the Fed’s preferred inflation gauge, measured 2.6% in December 2024, modestly slower than the 2.7% pace in December 2023.

Notably, energy prices saw a decline,

performance was driven by the 75 basis points (“bps”) of Fed rate cuts that resulted in (i) interest rates close to levels at which monetary policy is no longer deemed restrictive, (ii) robust fixed income fund flows, and (iii) declining interest rate volatility, which has returned to levels not seen since 2021.

Markets initially saw a spike in volatility following the Trump Administration’s April tariff announcement that were surprising both in scale and charged rates.

However, softer tariff implementation than initially threatened, legal challenges, less volatile economic data than in recent years, and more predictable monetary policy ultimately led to a gradual and meaningful decline in implied and realized volatility between May 2025 and the end of the year.

Meanwhile, Treasury yields declined across nearly all maturities – with yields falling between 77 bps in 2-year Treasuries and 40 bps in 10-year Treasuries – apart from the 30-year Treasury bond, which saw a modest rise in yields.

The yield changes were primarily driven by expectations for easier monetary policy.

The market and economic environment were beneficial to Annaly’s portfolio and strategy, helping the company deliver a 20.2% aggregate economic return for the year, including a 5.5% book value gain.

The strong economic return was achieved while maintaining conservative leverage over the course of the year, with economic leverage increasing modestly to 5.6x on December 31, 2025 from 5.5x a year earlier.

Given strong investor demand for mortgage REITs, Annaly was able to raise $2.6 billion in common equity capital through its at-the-market sales program at accretive levels and issued a Series J preferred stock in what marked the first sizeable non-rated preferred stock issuance in several years.

Most of the capital was allocated to the Agency business, which saw portfolio assets rise by $22.3 billion yoy to $92.9 billion on December 31, 2025.

In line with the asset growth, the Agency business saw its capital allocation increase marginally from 59% on December 31, 2024 to 62% a year later.

Annaly’s Agency MBS portfolio benefited from meaningful tailwinds throughout most of 2025 as Agency MBS supply and demand moved into much better balance.

For one, the slow housing market activity reduced MBS supply relative to recent years.

Meanwhile, demand broadened across investors as demonstrated by mortgage REIT equity raises and strong collateralized mortgage obligation creation.

Mutual fund inflows remained strong as well, maintaining money managers as the anchor buyer.

Finally, the Government-sponsored enterprises (“GSEs”) added to their retained portfolios for the first time in many years, a factor that was boosted further early in 2026 by the Administration’s directive to the GSEs to buy $200 billion in Agency MBS to support housing affordability.

Our Agency MBS investment activity focused on deploying capital raised primarily in higher coupon specified pool collateral, which offered attractive prospective returns and protection against potential higher prepayment speeds.

Annaly’s holdings of 5.0% and higher coupon specified pools rose by $17.7 billion notional over the course of the year, while some of the increase was offset by smaller balances in to-be-announced (“TBA”) securities in these coupons.

In addition, the Agency commercial mortgage-backed security portfolio grew by $3.2 billion market value, nearly doubling on the year, as Agency CMBS offered an attractive substitute for lower coupons, while trading at more attractive valuations for most of the year.

Annaly’s residential credit business grew its portfolio by $1.0 billion in market value over the course of 2025, while the business represents 19% of the firm’s capital on December 31, 2025.

Growth in the portfolio focused nearly entirely on our asset creation strategy, as the portfolio reduced its holdings of third-party securities by $589 million over the course of the year.

Meanwhile, holdings of retained Onslow Bay securities grew $990 million over the same period.

Annaly’s wholly-owned subsidiary Onslow Bay priced 29 securitizations for an aggregate $15.2 billion, and settled $18 billion of whole loans, representing a 38% increase in both loan acquisitions and securitization volumes yoy.

These securitizations further cemented Onslow Bay’s position as the largest non-bank issuer of Prime Jumbo and Expanded Credit MBS.

Among the securitizations issued in 2025, five were private transactions in which Onslow Bay tailored securities to meet our partners’ target durations.

In addition, OBX introduced a number of innovative deal structures, which have since been adopted by numerous other market participants.

Despite the high volumes, the underlying credit quality of Onslow Bay’s loan production is little changed, as the aggregate borrowers’ original FICO score was 761 and the original loan-to-value ratio was 67%.

Finally, we also continued to grow our MSR business, increasing the portfolio by 15% yoy to $3.8 billion in market value, or 19% of the firm’s equity capital on December 31, 2025.

Notably, our acquisitions made us the second largest buyer of conventional MSR in 2025, onboarding nearly $60 billion in unpaid principal balance throughout the year, and ranked as the sixth largest non-bank Agency servicer.

Bulk supply remained ample in 2025, and we expect the pace of activity to continue in 2026 due to rising origination volumes coupled with compressed gain on sale margins necessitating MSR sales from mortgage originators.

In addition to the bulk channel, we focused on expanding our flow purchase capabilities and are now active across all GSE platforms, providing access to current coupon MSR, which we plan to purchase opportunistically.

Finally, we further expanded our strong network of subservicing and recapture partners and are well-positioned to deepen our role as a preferred partner to the originator and servicer community.

Our MSR valuation multiple was relatively rangebound over the course of the year, increasing marginally during the fourth quarter given the steeper yield curve, modest spread tightening and lower volatility.

Finally, fundamental performance within the MSR portfolio continues to be strong – benefitting from declining subservicing costs driven by industry consolidation and ongoing technological innovation – and cash flows remain durable.

The portfolio paid 4.6% Constant Prepayment Rate

ANNALY CAPITAL MANAGEMENT, INC.

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Management’s Discussion and Analysis

particularly in gasoline and fuel.

The core measure, which does not include price changes in food and energy sectors, measured 2.8% year-over year, also slightly slower than at the end of 2023.

Measures of inflation have shown uneven progress in the services sector, with shelter inflation slowing at a very gradual pace and remaining above pre-pandemic averages.

Additionally, survey measures of short-run inflation expectations continued to decline in 2024, while longer-term inflation expectations appear well anchored.

The inflation outlook for 2025 is uncertain, as many policy proposals from President Donald Trump’s new administration – such as expansionary fiscal policy, immigration restrictions, and tariffs – indicate potential inflationary pressures.

U.S Treasury yields moved higher given the resilience of the U.S.

economy and elevated supply of Treasury debt hitting the market during the year.

The yield on the 10-year Treasury note ended the year 69 basis points (“bps”) higher at 4.57%, despite the 100 bps move lower in the Fed Funds rate.

The 10-year Treasury Inflation Protected Security (“TIPS”), which subtracts the expected inflation rate from the bond’s nominal yield, rose 52 bps as market participants revised upward their estimate of the Fed’s neutral rate in light of the resilient macroeconomy.

Meanwhile, the mortgage basis, or the spread between the 30-year Agency MBS coupon and 10-year U.S.

Treasury rate, widened slightly, ending the year 11 bps tighter than in December 2023.

(“CPR”) in Q4, unchanged quarter-over-quarter, while serious delinquencies remain relatively muted at 55 bps.

With a weighted average note rate of 3.28%, our portfolio is still 250 bps out of the money to refinance.

Economic Environment

Through the third quarter of 2025, the U.S.

economy has continued to perform strongly with real GDP rising by 2.5% SAAR.

Moreover, economic activity indicators suggest the growth momentum persisted in the fourth quarter.

This would mark a fourth consecutive year of robust economic growth, following a 2.8% yoy increase in real GDP in 2024 and a 2.7% average annual gain since 2022 despite elevated interest rates as well as high policy uncertainty in 2025.

economic resilience continues to be driven by high personal spending levels as consumers have benefitted from healthy real income growth, albeit at a slower pace than last year, and robust financial market performance.

Nominal personal consumption expenditures rose at an average of 4.8% SAAR per month through November, slightly below the 6.4% on average in 2024.

Moreover, slower price gains resulted in stronger inflation-adjusted spending thus far in 2025 than in 2024.

In addition, private nonresidential investment was robust at 6.5% SAAR while net trade has offered a rare boost to headline growth through the third quarter of 2025.

The labor market weakened gradually throughout 2025 given an anticipated slowdown in labor supply.

However, labor demand also slowed, with employers adding 584,000 jobs, compared to employment growth of 2.6 million and 2.0 million in 2023 and 2024, respectively.

Thus, the supply and demand for labor remained in a fragile balance.

The unemployment rate ended the year at 4.4%, increasing 0.3 percentage points compared to a year earlier.

This increase has been driven by a faster increase in the labor force than the employed, suggesting the lower hiring is not solely a function of the reduction to labor supply from immigration.

Job openings trended lower but remained above pre-pandemic averages, while layoffs stayed low.

As a result of the softer labor market, wage growth, as measured by the Employment Cost Index, decelerated from a pace of 3.8% yoy at the end of 2024 to a still healthy 3.5% yoy at the end of the third quarter of 2025.

Inflation was little changed on a yoy rate in 2025 and progress towards the Fed’s 2% target remained slow.

The headline Personal Consumption Expenditure Chain Price Index, the Fed’s preferred inflation gauge, measured 2.8% yoy in November 2025, essentially unchanged from the 2.7% yoy pace in December 2024.

The core measure, which does not include price changes in food and energy sectors, measured 2.8% yoy as of November – slightly slower than at the end of 2024.

Despite the firmness in the overall rate, there were some positive developments.

Service sector inflation continued to slow, with core services in the Consumer Price Index falling from 4.4% yoy in December 2024 to 3.0% yoy at the end of 2025.

The moderation in service sector inflation was driven by housing due to slower rent growth and home price appreciation.

However, this was offset by an uptick in core goods inflation which rose from -0.5% yoy in December 2024 to 1.4% yoy in December 2025.

The rise has been driven by tariffs, which have increased the prices of goods, most of which are imported.

Of note, the passthrough of the tariffs has been uneven and more muted than initially expected.

Treasury yields moved lower across the curve in 2025 as the Fed continued along its gradually dovish policy path, cutting the target range for the Fed Funds Rate by 75 bps in the second half of the year.

The 2‑year Treasury yield ended the year 77 bps lower, while the yield on the 10‑year Treasury note declined 40 bps to 4.17%.

This dynamic resulted in a meaningful steepening of the yield curve, as longer‑term rates continued to incorporate a term premium reflecting the elevated level of Treasury supply.

Meanwhile, market‑based measures of inflation expectations remained well‑anchored throughout the year.

In addition, interest rate volatility declined significantly, contributing to a tightening of the mortgage basis, or the spread between the 30‑year Agency MBS coupon and the 10‑year U.S.

Treasury rate, which ended the year 39 bps tighter.

The following table below presents interest rates and spreads at each date presented:

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6-Month 3.58% 4.25% 5.15%

ANNALY CAPITAL MANAGEMENT, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis

Income Tax Reform

On July 4, 2025, H.R.

1, also known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law.

The OBBB makes material changes to U.S.

tax law, including some provisions that affect the taxation of REITs and their investors.

In particular, the OBBB (i) permanently extends the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code and (ii) increases the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025.

The results of the OBBB changes are not expected to have a material effect on the Company’s financial operations or related disclosures.

Results of Operations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity