Home Builder Stocks Decline As Fed Hikes Rates And Unwinds

The bloom is off the rose for home builders. Yes, it had been a great run, fueled by The Fed’s zero-interest rate policy (ZIRP) and asset purchases (QE). But despite a roaring economy, SPDR S&P Home builders ETF have been falling since January as The Federal Reserve Open Market Committee (FOMC) sticks to their guns and keeps normalizing interest rates.

https://confoundedinterestnet.files.wordpress.com/2018/10/spdrhbfed.png?w=622&h=448

Yes, the Fed Dots Plot project indicates that there is still upside momentum to short-term interest rates.

https://confoundedinterestnet.files.wordpress.com/2018/10/feddotsplots.png?w=624&h=449

And the Fed’s System Open Market Accounts (SOMA) show a declining inventory of Treasury Notes and Bonds to let mature.

https://confoundedinterestnet.files.wordpress.com/2018/10/somadist.png?w=624&h=449

Source: Confounded Interest

 

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