Monday, November 4, 2019

Rate addiction clouds U.S. homebuilding stocks' outlook

Shares of homebuilders will have to break unusually close ties to interest rates to move higher, according to Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. Dutta cited the relationship between S&P’s broadest index of U.S. builders and the yield on 10-year Treasury notes in an email Monday. 

 The one-year correlation between them since late September has been about minus 0.9, the most negative reading since 2001, according to data compiled by Bloomberg. The indicator shows homebuilding stocks have kept pace with lower interest rates more than usual, and vice versa.

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