I’m Guessing that Treasuries and Home Builders Moving in Opposite Directions is Not a Good Thing.

Given the rally in the ten and thirty year notes today, it was a little surprising to see the home builders fall down. Hovnanian lost 2.8%, Toll Brothers fell 3.4%, Pulte was off 3.7% and Lennar lost 3.3%, while the 10-year yield fell to 4.25%. Usually, a drop in 10-year yields is a positive for home builders since mortgage rates are priced off that issue, and lower mortgage rates means more demand for homes.