US homebuilders climb as bond yields retreat
XHB•Homebuilders rise as yields ease
Shares of interest-rate sensitive homebuilders rose as a drop in long-term bond yields improved risk appetite.
The Treasury Department announced it would double the size of liquidity support buyback operations for longer-dated bonds.
Yields on the 30-year maturity US30YT=RR retreated from their highest level since 2007 following the announcement, last trading at 5.203%. Yields on the benchmark U.S. 10-year note US10YT=RR pulled back from their 2025 high and last stood at 4.660%.
Homebuilder and housing-related stocks gain
D.R. Horton DHI.N, Lennar Corp LEN.N and PulteGroup PHM.N gained between 3.5% and 4.5%, while construction equipment supplier Builders FirstSource BLDR.N climbed 7.1%.
Toll Brothers TOL.N climbed 6.9% amid the broader advance despite downbeat third-quarter results on Tuesday.
The S&P 1500 Homebuilding index .SPCOMHOME added 4.4%, and the PHLX Housing Index .HGX gained nearly 3.2%.
Fading hopes for a Middle East peace deal and rising inflation fears had pushed global bond yields to multi-decade highs on Tuesday, pressuring risk assets in major markets. Declining yields can potentially lead to cheaper mortgage rates, benefiting homebuilders as affordability improves for prospective buyers.
