US DATA: Decline In Pending Home Sales Bodes Ill For Market Activity
Feb-27 15:17
Pending home sales in January fell much more sharply than expected (-4.6% vs -0.9% expected, -4.1% prior rev from -5.5%), leaving the Y/Y measure at -5.2% (-1.1% expected, -3.1% prior rev from -2.9%), per the NAR's Pending Home Sales Index.
- This was an all-time low for the index, with the 70.6 reading representing sales nearly 30% below the levels of 2001. Activity dropped in 3 of 4 regions (Northeast +0.3%), with sales in the South collapsing 9.2% M/M to an all-time low index reading of 81.0. The latter is a major turn for the worse for a region that drove sales improvements in 2020-22.
- Per the NAR’s Chief Economist Lawrence Yun, weather effects may have played a role: “It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months. However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”
- But the downturn has been consistent since early 2022. And as a leading indicator of sales activity, as can be seen in the accompanying chart vs existing sales, this bodes poorly for home sales.
- As we continue to note, there is unlikely to be a turnaround unless interest rates fall substantially or unemployment picks up.
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US DATA: Consumer Sentiment Slips In January With Softer Jobs Perceptions
Jan-28 15:15
- The Conference Board consumer survey saw confidence disappoint in January at 104.1 (cons 105.9) after an upward revised 109.5 (initial 104.7) for its lowest since September
- Declines were seen in both main categories, also to their lowest since September, but were most pronounced for the present situation.
- Present situation: 134.3 after an upward revised 144.0 (initial 140.2).
- Expectations: 83.9 after an upward revised 86.5 (initial 81.1).
- Within the details, the closely watched labor market differential gave back some of its recent gains as it fell from 22.2 (highest since May) to 16.2 (technically lowest since Sept).
- The perception of jobs plentiful fell from 37% to 33% vs the 46% averaged in 2019 or 40% through 2017-19.
- By rising again, the differential points to some further trend increases in the unemployment rate although it shouldn’t be used as a month-to-month guide.
SEK: Tariffs Key To EURSEK Outlook
Jan-28 15:13
- Zooming out, the greatest risk to SEK this year is likely Trump’s tariff approach. The imposition of tariffs on EU companies would likely weigh on European equities, which traditionally weakens SEK relative to G10 peers. Additionally, broader EU economic weakness on the back of the tariffs may reduce demand for Swedish exports.
- However, the ECB’s monetary policy response to US tariffs (assuming the negative growth channel dominates the inflation channel) is likely to be more dovish than the Riksbank’s. The Swedish policy rate is already approaching assumed neutral levels, underscored by the Riksbank’s more cautious stance. Meanwhile, the ECB could still cut by 75bps (following Thursday’s fully priced 25bp cut) before reaching assumed neutral levels of 2%. More on the ECB in our preview here.
- Finally, the impact of past Riksbank cuts is expected increase real GDP by 1.9% Y/Y in 2025 (BBG consensus), handily outperforming the Eurozone growth consensus of 1.0% Y/Y.
- It’s these M/T rate and growth differentials that could prove a key driver of the EURSEK vol curve which, alongside broader G10 FX vol, has shifted lower during the course of this month.
MNI: US CONF BOARD CONSUMER CONFIDENCE 104.1 IN JAN V DEC 98.7
Jan-28 15:12
- MNI: US CONF BOARD CONSUMER CONFIDENCE 104.1 IN JAN V DEC 98.7
