Banks Stabilize • Yields Jump • Week Ahead

March 25, 2023 | Hoya Capital

Banks Stabilize • Yields Jump • Week Ahead Daily Recap Mar 27 Written By Alex Pettee, CFA U.S. equity markets finished mostly higher Monday while benchmark interest rates rebounded after reports of potential expanded regulatory balance sheet support for struggling banks eased fears of broader contagion. Entering the session on a two-week winning streak, the S&P 500 finished higher by 0.2% today, but the tech-heavy Nasdaq dipped 0.9%, giving back some of its recent significant outperformance.

Real estate equities were mixed today as a rebound from beaten-down office and small-cap REITs were offset by declines from several large-cap REITs. The Equity REIT Index finished lower by 0.1%. Traders backed off the "safe haven" trends that had prevailed over the prior two weeks, sending the 2-Year Treasury Yield higher by more than 20 basis points to back above 4.0%. After the close today, residential mortgage REIT Invesco Mortgage (IVR) trimmed its dividend by 38.5%, the fifth mREIT to reduce its dividend this year.

Pressured by interest rate volatility, IVR estimated that its Book Value has declined about 5% quarter-to-date. Income Builder Daily Recap U.S. equity markets finished mostly higher Monday while benchmark interest rates rebounded after reports of potential expanded regulatory balance sheet support for struggling banks eased fears of broader contagion. Entering the session on a two-week winning streak, the S&P 500 finished higher by 0.2% today while the Mid-Cap 400 and Small-Cap 600 each advanced more than 1%.

The tech-heavy Nasdaq 100 dipped 0.9% today, giving back some of its significant outperformance over the past month. Real estate equities were mixed today as a rebound from beaten-down office, retail, and other small-cap REITs were offset by declines from several large-cap REITs. The Equity REIT Index finished lower by 0.1% with 12-of-18 property sectors in positive territory, while the Mortgage REIT Index rallied 1.9%. Bank stocks stabilized today following a Bloomberg report over the weekend that US authorities are considering ...