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What’s happening: The International Monetary Fund’s Global House Price Index, which tracks 57 countries, has surpassed its prior peak from 2008. According to Oxford Economics, house prices are growing at over 10% year-over-year in many major economies.
The frenzy is boosting stocks exposed to the sector. The iShares exchange-traded fund tracking residential real estate is up 23% in 2021, significantly outpacing the S&P 500.
This just in: Online real estate broker Redfin said houses were on the market in May for just 16 days on average, a record low. At the same time, 54% of houses sold above their listing price, an all-time high.
Intense bidding wars, supply shortages for materials like lumber and the prospect of higher interest rates are threatening to derail the market. Housing starts and building permits figures for May came in weaker than expected, according to a government report Wednesday.
And some are ringing alarm bells, even though analysts say the market is healthier than it was in the run-up to 2008 thanks to tighter lending standards.
Bloomberg Intelligence economist Niraj Shah wrote earlier this week that the market will “face a critical test” when borrowing costs start to rise. The Federal Reserve indicated on Wednesday that it could hike interest rates sooner than expected due to fears about inflation (which Oxford Economics notes have been made worse by the boom in housing prices).
Wall Street is rushing to get workers back to the office
Wall Street is wasting no time getting its employees back into the office — whether they want to be there or not, my CNN Business colleague Matt Egan reports.
Big picture: Even more than other industries, Wall Street is in a rush to turn the page on this extended era of virtual work.
One factor is cultural concerns, as executives note that Zoom calls and Slack messages are no substitute for in-person bonding and training. Others worry about the cybersecurity and risk management vulnerabilities inherent to businesses that conduct billions of dollars of transactions virtually every day.
Plus, at its core, banking is a face-to-face business — and no one on hyper-competitive Wall Street wants to lose a deal because of a slow WiFi connection.
“You’re creating your own unlevel playing field if you are working from home while your competition is out seeing clients face-to-face,” said Mike Mayo, a veteran banking analyst at Wells Fargo. “The banking industry certainly seems intent on getting employees back to the office. But it’s much more pronounced on Wall Street, where the degree of competition has always been several levels above the rest.”
Corporate America scrambles to honor Juneteenth
Now, markets and regulators are scrambling to figure out how they’ll incorporate the day into their calendars.
SIFMA, the lobby group for the US securities industry, tweeted Thursday that it wouldn’t recommend a market holiday this year, since Juneteenth falls on a Saturday. But going forward, the organization said it would incorporate it into its recommended holiday schedule for bond markets.
The Federal Reserve said in a statement that it would close its Washington, D.C. office on Friday.
Watch this space: Bloomberg notes that US markets can be slow to catch up with Congress. Martin Luther King Jr.’s birthday became a federal holiday in 1983, but it took 15 years for major exchanges to decide to close for the day.
Amazon is sponsoring several Juneteenth events this weekend. Apple is giving US corporate employees the day off on Friday. Starbucks is paying hourly employees 1.5 times their regular wages on Saturday, while Chipotle is giving customers an opportunity to help close the racial wealth gap by donating to Project 10X, an initiative that promotes racial equity.
