Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Daily Recap: REITs Climb | Yields Retreat | PPI Cools

Groundhog day? An oddly similar day to yesterday on several fronts, US equity markets finished the day fractionally higher with the S&P 500 ETF (SPY) matching yesterday's gains of 0.1% while the Nasdaq ETF (QQQ) finished fractionally lower, retreating by 0.1%. Like yesterday, inflation data this morning came in cooler-than-estimates with Core PPI retreating to the slowest rate of year-over-year growth since early 2017. And again like yesterday, the 10-Year Treasury Yield (IEF) yield ticker lower by 5 basis points, continuing to retreat from last week's intra-day high of 1.97%, ending the day at 1.82%.

Naturally, lower yields again boosted the more defensive and yield-oriented equity sectors with the materials, real estate, consumer discretionary, and utility sectors outperforming on the day. The broad-based Real Estate ETF (VNQ) finished the day higher by 0.8% following yesterday's 0.9% gains. Today's gains were led by the shopping center, cell tower, and timber REIT sectors while mall REITs were the lone sector in negative territory on the day. 

The Hoya Capital Housing Index, the benchmark that tracks the performance of the US housing industry, finished the day higher by 0.6%, led to the upside by the real estate technology and brokerage sector with strong performance from Realogy (RLGY) and Zillow (Z). After lagging for much of the year, the real estate technology and brokerage sector has sprung back to life over the last quarter with the sector jumping 17% versus the index's gains of 10% following strong earnings reports. Homebuilders also delivered a solid day with NVR (NVR), Meritage (MTH), and Taylor Morrison (TMHC) all climbing at least 1% on the day. 

This morning, the Bureau of Labor Statistics released Producer Price Index data for October. In a repeat of yesterday's CPI data, the "headline" PPI print came in slightly hotter-than-expected but the more economically-relevant Core PPI data was cooler-than-estimates. Year-over-year, Core PPI is higher by just 1.63%, the coolest rate of producer price increases since early 2017. Yesterday, the BLS reported that Core CPI rose 2.31% on a year-over-year basis, retreating from last month's 2.36%, and showing signs of cooling yet again following a brief inflation scare in 2018 after the passage of tax reform and the concurrent synchronous global growth. 

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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