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Market sentiment toward large domestic banking organizations appeared to improve somewhat over the intermeeting period, likely related in part to further reductions in nonperforming loans and growing confidence in the economic outlook. Equity prices for large domestic banks outperformed broad equity indexes over the intermeeting period, as did the equity prices for most other types of financial institutions. In contrast, equity prices for agency mortgage real estate investment trusts declined, reflecting the rise in longer-term interest rates, the underperformance of agency MBS, and weaker-than-expected earnings reports.
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