As a REIT investor, I’ve learned to be watchful whenever Janet Yellen appears in public. REIT stocks aren’t always affected when a Fed authority steps up to say something publicly. However, in 2015, the RMZ, a prominent index of the REIT industry, often dropped within a week of these events.
Janet Yellen, who is an expert on labor market, reaffirmed last week that interest rates should increase this year despite the current slack in the labor market. But many people believe that the slack will deter increased rates. If there’s still slack, wage gains can continue, and only greater inflation pressure would make for increasing interest rates.
The US economy is growing, but as recruitment hasn’t picked back up and a lot of the workforce are underpaid or working only part time, it doesn’t feel like it. And right now, there aren’t any strong signs that’ll change soon.
So far, her statement has not really hit the RMZ, it’s only dropped slightly, with most investors watching China or Greece instead. And with good reason!
The next big meeting is next week, but it’s summer vacation time; we might not have a problem then, either, if we’re lucky.
Written by Heli Brecailo
Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.
Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.