The Q1 earnings season delivered some great results, but the interest rate hikes are slowly making it difficult for short-term investors to hold onto stocks as the 10-Year Treasury yield continued to go up this week.
The housing market is having a really hard time turning around as shortages of land and skilled labor are deterring homebuilders from bringing new units to the market at a pace home buyers would appreciate. Homebuilders took out more building permits in April than they started construction on new units, indicating there is a large gap between the will and ability of the industry to supply new housing units in the market.
There were some decent earnings reports from a number of household American brands that kept the bullish momentum going early in the week, but stocks fell hard on Tuesday once the 10-year Treasury yield went up to 3.10% and provided ample reasons to fund managers to move money out of equities and into bonds.
To conclude, there were not many key economic data releases this week and to understand more about the housing market, we have to wait until next week. For now, stocks are in a rut and unless the Fed gives a clear signal about hiking the rates, major stock indices are likely to continue trading within narrow ranges.
Be sure to check out our previous week’s edition here, in which record job openings signaled a robust labor market in the coming months.
