Income Issues are Holding Up Well on This Crazy Day
By: Tim McPartland,
It was a surprise move overnight from China to devalue their currency and there is no doubt that common stocks are hating the move—but income issues, in particular REITs, are fine with the move (or at least the immediate results of the move).
REITs are flying today as the 10 year treasury rate is plunging–trading at a recent low of 2.14%, down 10 basis points on the day. Earlier in the day REITs were up about a percent, before settling back to plus .68%. Preferred stocks and exchange traded debt issues are flat with little reaction to rates. Utilities are following REITs and are up about a 1/2%.
Our suspicion is that the reactions today will be short lived and common stocks will stabilize tomorrow as will interest rates—but for now we will just enjoy the ride.