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Retail sales and job openings loom large for real estate investors

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A breather after the jobs report

The week after the jobs report is usually pretty data-light, and this week is no exception. The most important data will be the JOLTS job openings and retail sales.

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Economic data this week

Here’s a rundown of this week’s economic data.

Monday, March 9, 2015

  • Labor Market Conditions Index

Tuesday, March 10, 2015

  • NFIB Small Business Optimism
  • wholesale inventories
  • wholesale sales
  • JOLTS job openings

Wednesday, March 11, 2015

  • Mortgage Bankers Association (or MBA) mortgage applications
  • monthly budget statement

Thursday, March 12, 2015

  • initial jobless claims
  • Bloomberg consumer comfort
  • retail sales
  • Import Price Index
  • business inventories
  • change in net worth

Friday, March 13, 2015

  • Producer Price Index
  • University of Michigan Sentiment

Earnings reports this week

Thursday, March 12, 2015

Friday, March 13, 2015

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Impact on mortgage REITs

Real estate investment trusts (or REITs) such as MFA Financial (MFA), Annaly Capital (NLY), and American Capital Agency (AGNC) will emphasize data that will move the bond market. For them, the upcoming week will be about digesting the jobs report, which showed that wage inflation remains muted. Bonds reacted negatively to the jobs report because payroll growth and unemployment fell. Yields increased 13 basis points.

While a rate hike at the June FOMC meeting may be baked into the cake already, if we start seeing wage growth, then inflation may be around the corner and the Fed will have to be more aggressive. As long as wage growth remains muted, we can probably expect a hike to get off the zero bound and then caution regarding further hikes.

Investors interested in trading the mortgage REIT sector via an ETF should look at the iShares Mortgage Real Estate Fund (REM). Investors who are interested in making directional bets on interest rates should look at the iShares 20-year bond fund (TLT).

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