Catching a Whiff of Higher Rates

While it still may be premature to look for the 10-year to move back over 3% anytime soon, it is noteworthy to see yields rising today along with falling equity prices. 

One of the proxies we are observing for trade ideas and for a general view of rates is the action in the commercial real estate stocks in the IYR, ETF for the REITs. 

REITs are a classic rate-sensitive sector, typically doing well with low rates and less so with rising rates.

After a multi-week rally, the IYR is back up to a its trendline throughout 2015, heretofore. Should the rally now fail it likely bodes for higher rates and even an outright short in the REITs.

Note that the structure of the REITs for this year is still a corrective one, even with the rally into August.