Summary

• U.S. equity markets finished broadly-higher Thursday as the partisan tensions eased and as investors begin to price-in the anticipated effects of the "trifecta" of political control for Democrats for economic policy.
• Now higher by 1.6% for the week, the S&P 500 finished higher by 1.5% today while the Dow Jones Industrial Average gained 212-points. Small- and Mid-Caps added to their robust weekly gains.
• Real estate equities have gotten off to a slow start in 2020, underperforming for the fourth-straight day as the Equity REIT ETF declined by 0.2% with 10-of-19 property sectors in negative-territory.
• With additional stimulus high on the docket for the incoming administration, all eyes are on inflation expectations, the Fed, and Treasury Yields. Meanwhile, Bitcoin surged another 19.3% to fresh highs at nearly $40,000.
• We heard business updates from a handful of net lease REITs over the last 24 hours including GNL, EPR, and AFIN. While rent collection has almost fully "normalized" for most REITs, movie theater owner EPR collected less than 50% of rent in Q4.

Real Estate Daily Recap

U.S. equity markets finished broadly higher Thursday as the partisan tensions eased and as investors begin to price-in the anticipated effects of the "trifecta" of political control for Democrats for fiscal policy. Now higher by 1.6% for the week, the S&P 500 ETF (SPY) finished higher by 1.5% today while the Dow Jones Industrial Average (DIA) gained 212 points. Real estate equities have gotten off to a slow start in 2020, underperforming for the fourth-straight day as the broad-based Equity REIT ETF (VNQ) declined by 0.2% with 10 of 19 property sectors in negative territory. The Mortgage REIT ETF (REM) gained 0.1% today but remains lower by 0.7% on the week.

With additional stimulus likely high on the political docket for the incoming Biden administration, all eyes are on inflation expectations, the Fed, and the 10-Year Treasury Yield, which again climbed to fresh post-pandemic highs at 1.07%. Bitcoin (BTC-USD) surged another 19.3% to fresh highs at nearly $40,000. Nine of the eleven GICS equity sectors finished higher on the day, led by the Technology (XLK), Consumer Discretionary (XLY), and Energy (XLE) sectors. Homebuilders led the Hoya Capital Housing Index to solid gains as well as the 30-Year fixed-rate mortgage dipped to fresh historic lows, laying the groundwork for a strong start to 2021 for the U.S. housing markets.

Today's gains were also aided by encouraging employment data as Initial Jobless Claims ticked lower to 787k to five-week lows, showing signs of improvement after an uptick in December corresponding with the "third wave" of economic lockdowns in several cities. Continuing Claims decreased to 5.07 million, down another 100k from last week. Since the peak in early May at nearly 25 million, Continuing Claims have retreated by 19.7 million. As discussed last week, the newly-signed stimulus package will provide an additional $300 per week in enhanced unemployment benefits, in addition to direct payments of $600 to most Americans and will provide additional funds for the Paycheck Protection Program extension. Economists are looking for employment gains to slow to roughly 100k in tomorrow's non-farm payrolls report following and for the unemployment rate to tick up slightly to 6.8%.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.