Weekly Realist real estate roundup (Part 6)

Market Realist

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After a break last week, bonds have a more data-heavy week

There’s more economic data on Thursday this week than there was all of last week. Earnings season is beginning to wind down, with only Chimera Investment Management (CIM) expected to report.

Economic data this week

Monday, August 12

  • Monthly budget statement

Tuesday, August 13

  • NFIB Small Business Sentiment
  • Import prices
  • Retail sales
  • Business inventories

Wednesday, August 14

  • MBA Mortgage Applications
  • Producer Price Index
  • NY Fed Report on Household Debt

Thursday, August 15

  • Initial jobless claims
  • Bloomberg Consumer Comfort
  • Empire Manufacturing
  • Consumer Price Index
  • Treasury International Capital Flows
  • Industrial production
  • Capacity utilization
  • Manufacturing production
  • NAHB Housing Market Index
  • Philly Fed

Friday, August 16

  • Nonfarm productivity
  • Unit labor costs
  • Housing starts
  • Building permits
  • University of Michigan Consumer Confidence

Earnings Releases this week

Thursday, August 15

  • Chimera Investment Management (CIM)

Implications for mortgage REITs

After not mattering for quite some time, inflation numbers are now relevant as far as Fed policy goes. REITs like American Capital Agency (AGNC) or Annaly (NLY) will focus on the import price index, the producer price index, the consumer price index, and unit labor costs. If the Fed starts seeing some inflation, it will not only breathe a sigh of relief, but it will also probably accelerate the unwinding of quantitative easing. The Treasury International Capital Flows will matter as well, as many sovereign countries park the capital from their trade surpluses in mortgage-backed securities.

(Read more: Annaly Capital Management portfolio yield continues to fall)

Implications for homebuilders

Homebuilder earnings are largely done, with only Toll Brothers (TOL) left. That said, there’s a lot of economic data of interest to builders like Lennar (LEN) and KB Home (KBH) this week. Retail sales will give clues as to how the consumer is faring—a happy consumer spending money is good for the economy and new home sales in particular. On Thursday, the builders will have a lot of data to digest—particularly the industrial numbers, capacity utilization and industrial production. Increases in these numbers portend hiring. The National Association of Homebuilder Sentiment Survey isn’t really market-moving, but it will give the investor an idea of how the builders see the current market. Finally, on Friday, we get housing starts and building permits.

(Read more: Radar Logic futures curve predicts flat real estate prices until September 2014)

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