US DATA: Existing Home Sales Disappoint, Highest Relative Supply Since 2016
May-22 14:30
Existing home sales bely prior pick-up in pending home sales, chalking up the lowest April since 2009. With inventories also rising, the relative supply of 4.4 months was the highest for an April since 2016.
- Existing home sales disappointed in April at 4.00m (cons 4.10m) after 4.02m, for the lowest seasonally adjusted annualized level since Sep 2024.
- It left a -0.5% M/M decline after the heavy -5.9% in March, confounding expectations of at least some improvement after pending home sales had increased 6.1% M/M in March after 2.1% in Feb following a weak turn of the year.
- It’s a weak April release though, with the lowest non-seasonally adjusted level of sales for an April since 2009.
- NAR chief economist Yun: “Home sales have been at 75% of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy. Pent-up housing demand continues to grow, though not realized. Any meaningful decline in mortgage rates will help release this demand.”
- Indeed, new purchase mortgage applications have been running around 60% of 2019 averages in recent weekly data.
- "At the macro level, we are still in a mild seller's market," Yun said. "But with the highest inventory levels in nearly five years, consumers are in a better situation to negotiate for better deals."
- What’s more, the 4.4 months of supply in April was the highest specifically for an April since 2016, having averaged 4.0 through April 2017-19.
- Full press release here.
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EUR: Lagarde Suggests EUR Strength is "Counterintuitive"
Apr-22 14:25
Lagarde seemingly suggesting the euro strength has run beyond fundamentals and is "counterintuitive", however she adds that EUR strength reflects Europe's fundamentals. She last commented on the currency as being stronger due to "resilient market sentiment" on April 17th, back when EUR/USD traded ~1.1375.
- We noted earlier that EUR had traded a record high in trade-weighted terms - and while it's unsurprisingly the most stretched DM currency vs historical ranges, GBP, CHF and SEK (just) see a more elevated REER relative to its five-year average. GBP leads on this alternative approach, sitting 6.2% and 7.5% higher than five- and ten-year averages vs 3.9% and 4.7% for the euro.
EUROZONE DATA: Weakest Consumer Confidence Since November 2023
Apr-22 14:20
Eurozone flash April consumer confidence was -16.7, the lowest since November 2023 and well below the -15.1 consensus and last month’s -14.5. The data was collected between April 1 – April 21, and so accounts for the initial fallout and subsequent changes to the US’ April 2 reciprocal tariff announcement.
- Clearly, the pullback in consumer sentiment presents a downside risk to the ECB’s 1.2% 2025 consumption projection. The June monetary policy decision will be presented alongside a fresh round of macroeconomic projections, compiled by Eurosystem (i.e. national central bank) staff.
- From a business perspective, focus turns to tomorrow’s April flash PMIs.
FRANCE: BBG-Macron Floats Snap Election As Early As Autumn
Apr-22 14:11
Bloomberg reports that President Emmanuel Macron is considering calling a snap legislative election as soon as the autumn of this year, claiming "Macron has consulted figures in his inner circle in recent weeks regarding such a scenario, according to people familiar with the exchanges. The discussions are merely consultative and no decision has been made." The last legislative election took place in July 2024, and delivered a fractured National Assembly that has seen away two prime ministers (Gabriel Attal and Michel Barnier), with the incumbent (Francois Bayrou) existing in an uneasy political ceasefire with parties of the left and right.
- The article claims that Macron's inclination towards a snap vote could be down to a boost in his approval ratings (up 7% on the previous month and close to the levels achieved before last year's election).
- The decision may be taken out of Macron's hands, though. A legislative election cannot take place within one year of the previous vote. Given the Bayrou gov'ts lack of a majority in the Assembly, come the summer, the left-wing New Popular Front alliance and the far-right Rassemblement National (RN, National Rally) could unite to out the Bayrou gov't and force a snap election.
- The little polling conducted to date on a prospective legislative election shows RN remaining the single most popular political force in the first round, with the pro-Macron centrist Ensemble trailing in a distant third place.
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