New York, Jan 25, 2026, 13:45 EST — The market has closed.
U.S. real estate shares finished Friday slightly higher, with REIT investors now waiting on a new signal from interest rates as Monday approaches. The Real Estate Select Sector SPDR Fund (XLRE) ticked up 0.3% to $41.25, and the Vanguard Real Estate ETF (VNQ) inched up 0.2%, landing at $90.54.
The shift was subtle, but the backdrop isn’t. REITs—firms that own real estate and usually distribute most taxable income as dividends—tend to track interest-rate moves closely. That’s because they rely on substantial borrowing, and their dividend yields vie directly with bond returns.
U.S. markets are closed Sunday, so Monday morning’s bond market action will be the first signal. If yields tick up quickly, real estate valuations can take a hit. But if they slip downward, the sector’s dividends suddenly seem more reasonable.
Treasury yields slipped as the weekend approached, with the 10-year note dropping about 2 basis points to near 4.23% on Friday. (A basis point equals one-hundredth of a percentage point.) Gene Goldman, chief investment officer at Cetera Investment Management, noted investors are adopting a “wait-and-see approach” ahead of a busy week packed with Fed updates, economic reports, and earnings. (Reuters)
Friday’s data failed to resolve the inflation question. S&P Global’s flash composite PMI, a survey measuring business activity, stayed in expansion at 52.8. Companies pointed to tariffs pushing costs up; “increased costs … are again cited as a key driver of higher prices,” said Chris Williamson of S&P Global Market Intelligence. Meanwhile, the University of Michigan’s consumer sentiment index rose to a final reading of 56.4. (Reuters)
In real estate, the biggest names saw mixed action. Prologis edged up roughly 0.4% on Friday, and American Tower added about 1%. On the downside, Equinix dipped 0.1%, while Realty Income and Simon Property each dropped close to 0.2%.
Part of the sector now straddles tech and interest rates. Data-center owners and tower landlords react to bond yields but also feel the ripple effects from sentiment on AI investments and network expansions.
The trade can quickly reverse. Should inflation remain stubborn due to tariff-driven price hikes, the Fed might pull back on hints of future rate cuts. That would drive yields higher, tightening funding costs and weighing on valuations for REITs sensitive to interest rates.
Headline whiplash is another risk. Last week demonstrated just how fast geopolitics and trade chatter can upend the usual script, pushing dividend-heavy real estate stocks to the sidelines as investors flock back to cash and short-term bonds.
All eyes turn to Wednesday’s Fed policy decision on Jan. 28 and Chair Jerome Powell’s remarks. Michael Pearce, Oxford Economics’ chief U.S. economist, expects the Federal Open Market Committee to hold an extended pause. At Franklin Templeton, Chris Galipeau points to earnings as the key driver this week, with a packed slate of reports hitting the market. (Reuters)
