IYR - A Critical Cooldown

2024-06-16 09:00:00 ET

Summary

• U.S. equity markets posted a mixed performance this week, while benchmark interest rates dipped to two-month lows after a critical slate of inflation data showed an encouraging cooldown in price pressures.
• As expected, the Fed held rates steady at two-decade highs of 5.50%, but the committee's "dot plots" showed that the FOMC is now penciling in just one rate-cut in 2024.
• Posting a series of record highs throughout the week, the S&P 500 advanced another 1.6% to extend its year-to-date total returns to over 15%, but the gains were notably top-heavy.
• Real estate equities - the single most "Fed-sensitive" market segment - were among the outperformed this week, however, as investors saw some light at the end of the tunnel amid a historical stretch of underperformance since the first Fed hike in March 2022.
• The recent rate retreat has revived some optimism back into the real estate sector, a welcome relief after a dismal two years of macro headwinds. Seven REITs raised their dividends this past week - the most hikes in any single week in over a year.

Real Estate Weekly Outlook

U.S. equity markets posted a mixed performance this week, while benchmark interest rates dipped to two-month lows after a critical slate of inflation data showed an encouraging cooldown in price pressures in May, helping to offset a relatively hawkish updated outlook by the Federal Reserve. As expected, the central bank held the Fed Funds rate steady at two-decade highs of 5.50%, but the committee's "dot plots" - which had not been updated since the March meeting - showed that FOMC members are now penciling in just one rate cut in 2024 at the median, down from the prior median of roughly 3 rate cuts....

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