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  • Alex Pettee, CFA

REITs And Utilities Dive As Yields Jump

  • Waning worries on the trajectory of global economic growth sent US equity markets to another week of record highs and Treasury yields surging to four-month highs.

  • Good news is bad news for the long-outperforming defensive and yield-sensitive sectors, including real estate and utilities. REITs dipped more than 3% on the week.

  • Rates up, REITs down? The paradigm that bedeviled real estate investors for much of the past three years showed hints of an unwelcome return this week.

  • The high-flying homebuilders, which have become increasingly rate-sensitive over the past 18 months, dipped more than 5% while Zillow, Realogy, and Redfin surged double digits.

  • Real estate earnings season was generally better-than-expected with another quarter of strong results from the residential REITs. More than half of REITs raised full-year guidance.

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