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The Closing Bell: U.S. Stocks Extend Gains On Fed Statement: Real Estate Leading Sector
FYI: U.S. stocks climbed on Thursday, led by big tech names, building on gains from a day earlier that were fueled by the Federal Reserve's decision to stand pat on interest rates.
Investors need to realize how real estate sector in particularly REITs is quite sensitive to interest rate. At present VNQ yields about 4% vs 2% with BND, and that attract many income oriented investors. At higher interest rate, REITs become less attractive as we have seem the rapid decline in early September when there was a chance of rate hike. Today VNQ bounced back strongly over the broader index and it will likely to Dow well until December.
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Investors need to realize how real estate sector in particularly REITs is quite sensitive to interest rate. At present VNQ yields about 4% vs 2% with BND, and that attract many income oriented investors. At higher interest rate, REITs become less attractive as we have seem the rapid decline in early September when there was a chance of rate hike. Today VNQ bounced back strongly over the broader index and it will likely to Dow well until December.