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Why bonds shrugged off the FOMC minutes and housing releases

Part 2
Why bonds shrugged off the FOMC minutes and housing releases (Part 2 of 6)

Earnings deluge on tap: Must-know releases to follow this week

This week has some important earnings releases

Economically, we don’t have anything really market-moving, although the GDP number could move markets. This is the second revision to fourth quarter GDP, and the Street is predicting a big revision downward—to 2.5% from the advance release, which was 3.2%.

GDPEnlarge Graph

Next week has some big earnings reports, with Annaly Capital (NLY) and Toll Brothers (TOL). We’re also beginning the retailer reporting season, and we’ll hear about housing spending with Home Depot (HD) and Lowe’s (LOW). Finally, the servicers have been getting slammed lately on political heat out of Washington. We’ll hear from Ocwen (OCN), which just had an MSR purchase blocked by New York State, and also Nationstar (NSM).

Economic data this week

Monday, February 24

  • Chicago Fed National Activity Index
  • Dallas Fed

Tuesday, February 25

  • Case-Shiller
  • FHFA Home Price Index
  • Consumer confidence
  • Richmond Fed

Wednesday, February 26

  • MBA Mortgage Applications
  • New home sales

Thursday, February 27

  • Initial jobless claims
  • Bloomberg Consumer Comfort
  • Durable goods
  • Kansas City Fed

Friday, January 28

  • GDP
  • ISM Milwaukee
  • Chicago Purchasing Manager
  • University of Michigan Confidence
  • Pending home sales

Earnings reports this week

Monday, February 24

  • Digital Realty Trust (DLR)

Tuesday, February 25

  • Home Depot (HD)
  • Toll Brothers (TOL)
  • Annaly Capital Management (NLY)

Wednesday, February 26

  • Lowe’s (LOW)

Thursday, February 27

  • Commonwealth REIT (CWH)
  • Ocwen Financial (OCN)
  • Walter Investment Management (WAC)
  • Northstar Realty Finance (NRF)
  • American Realty Capital Properties (ARCP)
  • Nationstar Mortgage (NSM)
  • Freddie Mac (FMCC)

Friday, February 28

  • Newcastle Investment Corp (NCT)

Impact on mortgage REITs

Mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and MFA Financial (MFA) are highly interest rate–sensitive. They’ll be at the mercy of the bond market’s machinations based on emerging markets concerns. Nothing coming out this week should affect the bond market at all. We’ll hear from the agency giant Annaly and also the non-agency Newcastle.

Impact on homebuilders

The builders will watch the home price indices. Housing starts were lower last week, but that may have been weather-related. Toll Brothers (TOL) will give a reading on the luxury end of the housing market. The builders have expressed optimism that this spring selling season will be strong. Existing home sales will also give clues about the overall activity in the real estate space. Homebuilders have been able to raise prices easily over the past year, but if real estate prices are moderating, then we could see the record-level gross margins they’ve been reporting begin to contract.

Impact on commercial REITs

There isn’t much coming out next week that’s going to matter to the commercial REITs. The office REIT sector will focus on some of the manufacturing-related numbers, as that would signal stronger economic growth—which could pull down vacancy rates.

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