Analisi intermarket

Real estate REITS: are we near the lows?

The market is changing again, and the forecasts of traders and investors seem to adapt to the idea that the market is ready for the first reductions in the level of interest rates.
The interruption of the increases recorded in the United States and Europe, together with the sharing of a lower-than-expected US inflation rate, already falling compared to previous data, has generated a certain euphoric climate in the market, modifying the price of some assets .
Among the various macro categories, particular attention should be paid to REITs, real estate trusts, assets which in recent years have undergone a strong downsizing due to the increase in financing costs and which could begin to notice some improvements with the formation of new economic perspectives.
What's happening to REITS? Fueling the euphoric climate on the markets was the CPI data shared in the United States on Tuesday, which highlighted a fairly significant contraction in inflation in the country and its core component.
Both the Fed and the ECB have always appeared to be data dependent, and although no decrease in the level of rates was mentioned, other than possible increases if necessary, something is starting to change on the rate futures market.
The reaction to the sharing of data from the CME's Fed Watch Tool remains curious, which shows a strong widening of the percentage of participants in favor of maintaining the interest rate at the current level at the December FOMC meeting.
By excluding the option of an increase from the range of choices, the market could therefore find greater security in trying to anticipate certain moves by the Fed.
In a scenario like the current one, certain assets could once again attract the attention of investors: on the front line there are REITs, whose performance is closely linked to the economic performance of the country they belong to, as they deal with the real estate market, in its various facets.
Which REITS to follow? There is no precise rule, and the answer to this question depends on the type of asset in which the REITs invest, as well as on fundamental variables linked to the structure of the real estate trust itself.
One of the assets most monitored by the investing public, as well as one of the most capitalized REITs listed on the NYSE, is Prologis Inc (PLD), which has already recorded a 15% comeback compared to last week's lows.
To monitor the performance of the market as a whole, however, it might make sense to follow an ETF, such as the much discussed iShares Dev MKT IWPD, which faithfully represents the performance of REITs in developed markets.

Author: Hermes A.I.

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