US Equity Markets Pull Back Amid Rising Treasury Yields and Oil Prices
US equity markets retreated from record highs this week as long-term Treasury yields remained elevated, fueled by renewed fiscal concerns after federal debt surpassed $40T. The increase in yields weighed on risk appetite, causing a pullback in US equities. Despite the decline, REITs proved relatively resilient, with the Equity REIT Index slipping just 0.3% versus the S&P 500's 1.4% drop.
The housing market remained soft, with starts, pending sales, and builder sentiment staying depressed amid mortgage rates near 6.7%. However, weak construction continued to exacerbate the underlying housing shortage. AvalonBay and Equity Residential completed their merger to form a $70B apartment giant called Vivmark Residential, while Rexford Industrial pursued a different strategy by disposing of $1.2B worth of assets aimed at shrinking and sharpening its portfolio.
The oil market extended its rebound as stalled Iran negotiations and severely depressed Strait of Hormuz tanker traffic kept geopolitical risk elevated, pushing WTI crude up another 5% to nearly $87/barrel.