VRAI - REITs Rip As Rates Retreat
2024-07-14 09:00:00 ET
Summary
- U.S. equity markets climbed to record highs, while benchmark interest rates dipped to four-month lows as investors rotated from high-flying growth stocks into beaten-down value names following a cooler-than-expected CPI report.
- Headline CPI declined 0.1% month-over-month, which dragged the annual increase to below 3% for the first time since March 2021, while CPI ex-Shelter is again below the Fed's 2% target.
- Combined with recent softness in employment data and relatively dovish Fed commentary, markets now see at least two Fed rate cuts this year, with September now viewed as a near-lock.
- Real estate equities - the most rate-sensitive market segment - delivered their strongest week of the year as weary investors finally saw some "light at the end of the tunnel."
- The Equity REIT Index surged 4.7% on the week, with 17 of 18 property sectors in positive territory. Meanwhile, the Mortgage REIT Index rallied 6.4%, while Homebuilders surged more than 13% on the week.
Real Estate Weekly Outlook
U.S. equity markets climbed to fresh record highs this week, while benchmark interest rates dipped to four-month lows as investors rotated from high-flying growth stocks into beaten-down value names following a cooler-than-expected CPI report. Combined with recent softness in employment data, a lukewarm start to earnings season, and a relatively dovish tone from central bank officials, markets are now pricing in between two and three Fed rate cuts this year, with September now viewed as a near-certainty based on swaps pricing....
REITs Rip As Rates Retreat