U.S homebuilders fall as blowout jobs report drives yields higher

LGI Homes

04/10/2024 18:12

** Interest rate-sensitive homebuilders shares fall on Fri
after Sept employment report blows past expectations, pushing
yields higher
    ** Benchmark U.S. Treasury 10-year yield  US10YT=RR  hits
two-mth high and was last at 3.965% as strong report further
dampens odds of big rate cuts at the Fed's remaining two
meetings this year  US/ 
    ** Rising interest rates leads to higher mortgage rates,
potentially hurting homebuilders
    ** PHLX Housing Index  .HGX  off 1.7% on Fri: Biggest losers
include LGI Homes  LGIH.O  4%, DR Horton  DHI.N  3.5%, Lennar
 LEN.N  3.4%, Toll Brothers  TOL.N  3%, Pultegroup  PHM.N  3%
    ** In S&P 500  .SPX , building products maker Builders
FirstSource  BLDR.N  down 2.8%, while home improvement retailers
Home Depot  HD.N  and Lowe's  LOW.N  both off about 1%
    ** Mortgage Bankers Association Chief Economist Mike
Frantantoni commented on Fri stronger-than-expected jobs report
could slow expected pace of rate cuts
    ** “MBA’s forecast is for longer-term rates, including
mortgage rates, to remain within a relatively narrow range over
the next year. This news will push mortgage rates to the top of
that range, but we do expect that mortgage rates will stay close
to 6% over the next 12 months," he wrote
    ** With move on Fri, HGX still up ~21% YTD

 (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))