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  • Alex Pettee, CFA

Good News Becomes Bad News For REITs

  • Done deal. US equity markets closed a wild week at fresh record highs after the U.S. and China clinched a long-awaited "Phase One" trade deal to avert tariffs on Sunday.

  • Along with a decisive election victory in the UK, the trade deal seems to resolve two critical geopolitical uncertainties. Investors, however, remain skeptical after endless false-starts in the trade dispute.

  • Good news has seemingly become bad news for the domestic, defensively-oriented REIT sector, which was on pace for a banner year before losing altitude over the past two months.

  • With potential clarity on key macroeconomic uncertainties, investors fear a return of the "rates up, REITs down" paradigm that dogged the REIT sector for 2016 through 2018.

  • For now, the "Goldilocks" macroeconomic environment under which REITs thrive remains intact. CPI and PPI data this week continued to reflect muted inflationary pressure.

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