In India, the decision-making process isn’t fast. It’s affected by the current assembly’s constitution. Slow decisions hurt a nation’s image.
Since the first general elections in 1951, the nation elected a single political party—the Indian National Congress (or INC)—to power. However, the trend broke in 1977.
In India, the population is divided among 29 states and seven union territories. Its population is very diverse. India’s geography and weather are also diverse.
India has been an intriguing nation throughout its long history. Apart from a rich history and a mixture of cultures over the centuries, India has an economic story to tell.
Jobs are the most important economic statistic for homebuilders. They need to see an increase in job growth to get some activity from the first-time homebuyer.
Last week, 291,000 people filed for first-time unemployment claims. This was our 13th sub-300,000 print on initial jobless claims this year, and the tenth in a row.
The ten-year bond had a tiny rally, with yields decreasing from 2.32% to 2.31%. Ginnie Mae TBAs rallied as well, rising from 104 10/32 to 104 17/32.
The Fannie Mae 3.5% TBA started the week at 103 12/32 and picked up 10 ticks to close at 103 22/32. Market participants may also be forecasting less volatility in interest rates. This benefits mortgage-backed securities.
Last week’s increase in mortgage rates was strange, given that bonds didn’t move that much. This week, mortgage rates gave back last week’s increase.
The FOMC minutes drove bonds last week, although they didn’t really reveal all that much. The ten-year bond ended last week at 2.32% and picked up a basis point to close out at 2.31%.
Last week contained the FOMC minutes, which were the highlight for the mortgage REITs. Overall, the bond market shrugged off the release, as there was really not much new information.
This week will contain a slew of important economic indicators for real estate investors. On Tuesday, we get the FHFA Home Price Index and also Case-Shiller.
The yield for 10-year Treasuries stands at 2.3%, whereas high yield bonds are returning close to 6%. Although the spread has narrowed by a record amount, you may still consider buying high yield bonds.
High yield bond volatility has lessened of late. Currently, the 30-day volatility for high yield bonds stands at 6.1%, though it hit nearly 70% during the crisis.
Lower international bond yields mean there are few alternatives within the fixed-income sector other than high yield bonds. But these aren’t as risky as they used to be.
With the US gross domestic product (or GDP) growing fast enough to support corporate revenue growth, and with wage growth absent, corporate profits have risen by a record amount. Profits have been steadily increasing since the crisis.
High yield bonds perform well when the economy improves. This should be intuitive as corporate earnings improve along with the economy, which means that default rates fall.
A case could still be made for tech stocks. Cyclical sectors, like technology, usually tend to outperform the S&P 500 (SPY) when the economy is improving.
Growth rates in the US tech sector (QQQ)(XLK)—including companies like Microsoft (MSFT)—have slowed down dramatically from the high levels it saw in the 1990s.
Stocks (SPY)(IVV) tend to remain undervalued or overvalued for a long time during crises and bubbles, respectively. The tech (QQQ)(XLK) bubble was a prime example of the latter.