I’ve been watching the homebuilders closely over the last few weeks, even as I remain bullish over the longer term on the sector. But today, I noticed something that may prove to be very positive over the next few weeks if it continues.
Specifically, as bond yields have risen, the homebuilder sector has held up much better than it has over the recent past when bond yields rise. This is a different price behavior that what we’ve seen over the last few months.
In the chart above, note that the U.S. Ten Year Note yield (TNX) bounced back above 3.4%. Of course, this is not unexpected given the accelerated decline we saw in yields over the previous few days as bond traders continued to bet on a recession.
What’s different is the reaction in the SPDR S & P Homebuilder ETF (XHB). Note that XHB had been a bit sluggish over the last few days, even as bond yields were falling. In other words, it is possible that we may be seeing a decoupling of the inverse effect of rising bond yields and XHB.
If that’s so, then the homebuilder sector may be preparing for another up leg. This would be very bullish.
I discussed the long-term investment potential in homebuilder stocks in my latest Your Daily Five video, focused on investing in Megatrends. To get full details on the homebuilder stocks and their long term bullish trend check out my recently posted Special Report titled: “How to Invest in the Housing Megatrend,” which you can download here. Members get a huge discount.
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