U.S homebuilders, REITs surge after Powell endorses rate cut

CBRE

23/08/2024 16:40

** Interest rate-sensitive homebuilders and real estate 
shares leap on Fri after Federal Reserve Chair Jerome Powell
telegraphs imminent rate cut in Jackson Hole speech
    ** "The time has come for policy to adjust," Powell says,
adding, "The direction of travel is clear, and the timing and
pace of rate cuts will depend on incoming data, the evolving
outlook, and the balance of risks."
    ** Markets pricing in higher chances for rate cut in Sept;
declining rates spur lower mortgage rates, aiding homebuilders,
and lead to cheaper financing for real estate firms/REITs
    ** Benchmark U.S. Treasury 10-year yield  US10YT=RR  slides
5.7 basis points to 3.804%, on track for biggest daily fall in
nearly three weeks
    ** PHLX Housing Index  .HGX  rises 3.5%: top gainers include
LGI Homes  LGIH.O  6%, M/I Homes  MHO.N  6%, Meritage Homes
 MTH.N  5%, Pultegroup  PHM.N  4% and DR Horton  DHI.N  3%
    ** Home improvement retailers Home Depot  HD.N  and Lowe's
 LOW.N  climb 2% and 3%, respectively, on Fri
    ** S&P 500 real estate index  .SPLRCR  rises 2% to nearly
2-yr high on the session
    ** Sector's top winners include BXP  BXP.N  (formerly Boston
Properties), American Tower  AMT.N , Alexandria Real Estate
 ARE.N , CBRE Group  CBRE.N  and Public Storage  PSA.N  up
between 2%-4.4%
    ** With moves on Fri, HGX up ~21% YTD and SPLRCR up ~8%
compared to 18% advance for S&P 500  .SPX 

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))