Weekly Realist real estate roundup, August 26–30

Part 5

Preview of the bonds week ahead: All about Friday’s jobs report

After a break last week, bonds have a more data-heavy week

After a dull week, we have the all-important jobs report on Friday to condend with.

Economic data this week

Tuesday, September 3

  • Markit U.S. PMI
  • Construction spending
  • ISM Manufacturing
  • IBD/TIPP Economic Optimism

Wednesday, September 4

  • MBA Mortgage Applications
  • Challenger Job Cuts
  • Trade balance
  • ISM New York
  • Trade balance
  • Beige Book
  • Vehicle sales

Thursday, September 5

  • Initial jobless claims
  • RBC Consumer Outlook
  • ADP Employment Change
  • Nonfarm productivity
  • Unit labor costs
  • Bloomberg Consumer Comfort
  • Factory orders
  • ISM Services

Friday, September 6

  • Change in payrolls
  • Unemployment rate
  • Average hourly earnings
  • Average weekly hours
  • Underemployment rate
  • Labor force participation rate

Earnings releases this week

No real-estate earnings releases.

Implications for mortgage REITs

For REITs like Annaly (NLY) or American Capital (AGNC), it’s all about the jobs report on Friday. Tapering quantitative easing depends on the employment numbers hitting the Fed’s forecasts. The Fed doesn’t only look at the unemployment rate, but also at the labor force participation rate. That number is at the lowest since the 1970s. This represents discouraged workers who would like to work full-time but have given up looking for a job or retired before they want to. The bond market will probably mark time until the report, although it will take a cue from the ADP employment report the day before.

Implications for homebuilders

Homebuilders like Lennar (LEN), KB Home (KBH), and Toll Brothers (TOL) are more economically sensitive than REITs, and there’s a lot of data to chew on next week. The ISM report on Tuesday will be an important data point, as it gives some insight into the state of manufacturing in this country, which is becoming a bigger driver of jobs. Factory orders and the Service ISM will be important as well. Friday’s jobs report won’t matter to the homebuilders as much as it does to the REITs, but it’s still important and will color the way stocks trade.

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