Bonds sell off despite weaker releases as emerging markets improve (Part 6 of 6)
This week has some important housing data
This week will have a lot of interesting data for homebuilders. We’ll get housing starts and building permits as well as the NAHB Housing Market Index. There will be more data coming about the manufacturing sector—we’ll see if last week’s disappointing industrial production numbers were backed up with any sort of anecdotal data out of these manufacturing surveys.
Economic data this week
Tuesday, February 18
- Empire State Manufacturing
- TIC flows
- NAHB Housing Market Index
Wednesday, February 19
- MBA Mortgage Applications
- Producer Price Index
- Housing starts
- Building permits
Thursday, February 20
- Initial jobless claims
- Bloomberg Consumer Comfort
- Consumer Price Index
- Philly Fed
- Mortgage delinquencies
- Mortgage foreclosures
- Index of Leading Economic Indicators
Friday, January 21
- Existing home sales
Earnings reports this week
- No real estate–related earnings this week
Impact on mortgage REITs
Mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and MFA Financial (MFA) are highly interest rate–sensitive. They’ll be at the mercy of the bond market’s machinations based on emerging markets concerns. Nothing coming out this week should affect the bond market at all. REIT analysts will want to see the delinquency and foreclosure data coming out of the Mortgage Bankers Association.
Impact on homebuilders
Analysts will watch housing starts data next week. Weather might end up having a dampening effect on starts, however. The builders have expressed optimism that this spring selling season will be strong. Existing home sales will also give clues about the overall activity in the real estate space. Homebuilders have been able to raise prices easily over the past year, but if real estate prices are moderating, then we could see the record-level gross margins they have been reporting begin to contract.
Impact on commercial REITs
There isn’t much coming out next week that is going to matter to the commercial REITs. The office REIT sector will focus on some of the manufacturing-related numbers as that would signal stronger economic growth which could pull down vacancy rates.
To learn more about office REITs, see The Fed’s economic growth forecast is good news for office REITs.
Browse this series on Market Realist:
- Part 1 - Bonds sell off despite weaker releases as emerging markets improve
- Part 2 - Fannie Mae TBAs fell as the 10-year bond yield dropped 8 points
- Part 3 - Ginnie Mae TBAs fell despite a better outlook for emerging markets
- housing starts