# Why the big drop in CAD REITs ETFs today?



## miass (Oct 30, 2013)

Both XRE and ZRE dropped 1.2-1.3% today. What could be the reason?


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## GoldStone (Mar 6, 2011)

REITs are sensitive to bond yields. Yields go up, REITs go down.










ADDED: 

To clarify, that picture is today's US yield quotes. REITs are sensitive to long term yields. 10 and 30 years.


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## james4beach (Nov 15, 2012)

Yes I would also say it probably has to do with the bond market. To generalize, the high yield or high dividend things all react to interest rates

That being said, REITs really didn't drop that much today and XRE is still well above the summer lows


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## Grover (Jun 3, 2013)

Can you post a chart of a bond ETF and REIT stock or ETF to show that correlation???



GoldStone said:


> REITs are sensitive to bond yields. Yields go up, REITs go down.
> 
> To clarify, that picture is today's US yield quotes. REITs are sensitive to long term yields. 10 and 30 years.


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## james4beach (Nov 15, 2012)

Grover said:


> Can you post a chart of a bond ETF and REIT stock or ETF to show that correlation???


http://stockcharts.com/h-sc/ui?s=ZRE.TO&p=D&yr=1&mn=0&dy=0&id=p64382591921

The dashed line is ZRE and the thick line is XGB (government bonds)


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## andrewf (Mar 1, 2010)

Nice illustration, james.


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## GoldStone (Mar 6, 2011)

Interesting blog post by an economics professor at York University. He shows that XRE sensitivity to interest rates varies with time. The sensitivity jumped this year.

http://perrysadorsky.blogspot.ca/2013/06/canadian-reits-and-interest-rates.html


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## Andrew (May 22, 2009)

I was under the impression that bond yields were falling lately though...


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## AltaRed (Jun 8, 2009)

Andrew said:


> I was under the impression that bond yields were falling lately though...


Sort of. Depends on your reference point http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/


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