The week ahead
Earnings season is pretty much over. Only five companies will report next week; nobody related to real estate is reporting.
Next week is not all that heavy data-wise, although we will get the S&P Case-Schiller Home Price Index and Pending Home Sales. The Case-Schiller data will be from March, which should begin the seasonally strong period.
Schedule of upcoming economic releases
- Case-Schiller Home Price Index
- Richmond Fed Manufacturing Index
- Consumer Confidence
- Dallas Fed Manufacturing Activity
- Mortgage Bankers Association Mortgage Applications
- Initial Jobless Claims
- Bloomberg Consumer Comfort
- Second Revision to Q1 GDP
- Pending Home Sales
- Personal Income
- Personal Spending
- PCE Deflator
- National Association of Purchasing Managers Index
- University of Michigan Consumer Confidence
Schedule of Upcoming Earnings Releases
Implications for mortgage REITs
The recent sell-off in the bond market has been negatively affecting the mortgage REIT space as the mortgage REITs have underperformed the S&P 500 by a sizable amount. Annaly (NLY) is down 9% since May 1st, American Capital (AGNC) is down 17%, and even adjustable rate REIT Hatteras (HTS) is down 6%, while the S&P 500 is up 4.2% for the month. In a rapidly rising interest rate environment, REITs that invest in adjustable rate mortgages should outperform those that invest in 30-year fixed rate mortgages.
Implications for home builders
The last home builder to report was Toll Brothers (TOL), who reported good earnings. The Homebuilder ETF (XHB) has slightly outperformed the S&P 500. Increasing home prices are generally good for home builders, so people will focus on the Case-Schiller numbers on Tuesday and also Pending Home Sales on Thursday.
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