• Alex Pettee, CFA

Surging Yields Negate REITs' Reopening Rebound

  • U.S. equity markets were broadly lower on a choppy week after encouraging coronavirus data and positive vaccine news triggered a "reopening rotation" that sent Treasury yields soaring to mid-pandemic highs.

  • Declining for the second-straight week, the S&P 500 retreated by 2.5%, while the tech-heavy Nasdaq 100 plunged 5.1% as investors rotated out of the COVID-winners and into more economically-sensitive sectors.

  • A strong week from the COVID-sensitive property sectors lifted real estate equities to another week of relative outperformance as the broad-based Equity REIT ETFs were lower by roughly 1%.

  • All eyes were on the Treasury markets this week as the 10-Year Treasury Yield briefly surged above 1.60% - the highest level since last March - despite dovish commentary from Fed Chair Powell.

  • "Beat and Boost" continues to be the theme of REIT earnings season. On a jam-packed week of earnings reports, a dozen more REITs raised their dividend, bringing this year's total to 33.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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