US DATA: Existing Home Sales Stabilizing At Low Levels
Nov-20 16:45
Existing home sales remained relatively stable in October per NAR data, showing a modest improvement to 4.10M (on a seasonally-adjusted annualized basis - was 4.05M prior, 4.08M consensus). The bigger picture of course is of fairly subdued activity, with sales settling around 75-80% of pre-2020 levels and 1/3 lower than the pandemic peak.
- Inventories dipped slightly, allowing the implied months of supply to fall to a slightly tighter 4.4, a 6-month low, having picked up to 4.7 as recently as June which was a post-2016 high. And the geographic distribution was mixed, with the midwest seeing 5.3% M/M growth in sales, but the other 3 regions flat/negative.
- We haven't received any new home sales data since the unusually strong August report due to shutdown (the September report still doesn't have a release date set), but clearly the existing home market looks to remain stalled with high prevailing mortgage rates stymying both supply (existing homeowners don't want to give up low rates) and demand (high rates at current house prices mean affordability is at multi-year lows).
- Affordability is the central issue - NAR Chief Economist Lawrence Yun noted in the report that sales "increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates. Rents are decelerating which will reduce inflation and encourage the Federal Reserve to continue cutting rates and pulling back their quantitative tightening. This will help bring more homebuyers into the market since the Fed rate has an indirect impact on mortgage rates."
- On that front, median prices were up 2.1% Y/Y, having steadied out in the low-$400k area.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: EGBs-GILTS CASH CLOSE: Light Bull Flattening Ahead Of UK CPI
Oct-21 16:45
European long-end yields fell slightly Tuesday, with UK CPI data looming.
- The highlight of the session was the release of UK September public finance data which showed a slightly lower-than-expected public sector net borrowing figure plus downward revision to August.
- That saw the UK yield curve bull flatten, mirrored across EGBs, and accelerating in mid-afternoon after US President Trump said on social media that there was a possibility of allies potentially "going into Gaza with a heavy force".
- The German curve bull flattened, with the UK's twist flattening.
- Periphery/semi-core EGB spreads closed slightly wider.
- Wednesday's scheduled highlight is the UK inflation data release - MNI's preview is here. As we note in the preview, despite some BOE MPC members appearing to have more entrenched views, we think that this data release will have huge importance for the prospects for a Q4 cut.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is unchanged at 1.908%, 5-Yr is down 1.3bps at 2.155%, 10-Yr is down 2.5bps at 2.552%, and 30-Yr is down 3.6bps at 3.128%.
- UK: The 2-Yr yield is up 0.4bps at 3.858%, 5-Yr is down 0.9bps at 3.944%, 10-Yr is down 2.7bps at 4.478%, and 30-Yr is down 4.3bps at 5.266%.
- Italian BTP spread up 0.3bps at 79.2bps / French OAT up 0.7bps at 79.2bps
SOFR OPTIONS: Dec'25 SOFR Call Condor Sale
Oct-21 16:40
- -5,000 SFRZ5 96.25/96.37/96.50/96.62 call condors, 7.25 vs. 96.37/0.10%
CHINA: China in Trilateral Currency Swap Talks with Japan and South Korea
Oct-21 16:36
- "*CHINA EYES 3-WAY CURRENCY SWAP WITH JAPAN,SOUTH KOREA: SCMP" (BBG)
- “Beijing seeks to strengthen regional financial ties and boost yuan use as US trade pressures weigh on East Asian economies”
- "China is in talks with Japan and South Korea – both US allies – about a possible trilateral currency swap to bolster the region’s financial safety net and deepen economic cooperation amid US President Donald Trump’s trade war, according to a source familiar with the issue."
- Full piece: https://www.scmp.com/news/china/money-wealth/article/3329849/china-eyes-3-way-currency-swap-japan-and-south-korea-amid-trumps-tariff-war-source
