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What to watch for in real estate, stormy week ahead

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10 year bond yield - LTAfter a stormy week, bonds have a lot of data to navigate

Last Friday’s jobs report punctuated what should have been a relatively dull week with a holiday in the middle. The 10 year bond sold off on the number, increasing the yield from 2.5% to 2.74%. We will see Monday if that move was overdone. Given the holiday and the fact that many senior traders took a 4 day weekend means that the move may have been exaggerated

Next week has generally non-market moving data, but we will get the minutes from the FOMC meeting that started the bloodbath.

Alcoa officially kicks off earning season next week, but the majority of the earnings announcements will come towards the end of the month.

Economic data this week

Monday, July 8th

  • Consumer Credit

Tuesday, July 9th

  • NFIB Small Business Survey
  • JOLT Job Openings

Wednesday, July 10th

  • MBA Mortgage Applications
  • Wholesale Inventories
  • Wholesale Sales
  • Minutes of the FOMC meeting

Thursday, July 11th

  • Initial Jobless Claims
  • Import Price Index
  • Monthly Budget Statement
  • Bloomberg July Economic Survey
  • Bloomberg Consumer Comfort

Friday, July 12th

  • Producer Price Index
  • University of Michigan Consumer Confidence

Implications for mortgage REITs

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For REITs like Annaly (NLY) and American Capital (AGNC), they simply need some stability in the bond market. The only thing that will affect rates next week is the release of the FOMC minutes. The rest of the data will not be market-moving. Given that REITs fell 8% again last week and are down 23% since rates started going up, a week of non-market moving data might just be what the doctor ordered. Given that mortgage rates increased as much as the 10 year yield last week (usually MBS move with less volatility than the 10 year) we could be in for a small snap-back in MBS.


Implications for home builders

Home builders, like KB Home (KBH), Toll Brothers (TOL), and Lennar (SPF), will focus on consumer credit, as easing lending standards can only help them, and they will focus on the consumer confidence data and the JOLT job openings data for clues about the labor market. So far we have yet to see the increase in rates affect homebuilders, but at some point it should start to be felt.

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