US DATA: Pending Home Sales Regain Ground, But Remain Very Weak
Pending home sales ticked up to 72.0 in February from 70.6 in January, per the NAR's index. This represents a slightly better-than-expected rebound from January's all-time low, but at still moribund levels (the index's construction implies sales were 28% below the levels of 2001 when the series begins).
- While this was a 2.0% M/M gain, pending transactions were down 3.6% Y/Y. Activity across regions was mixed, falling in the Northeast and West, but picking up in the Midwest and, especially, the South (+6.2% M/M). All regions were down Y/Y.
- Per NAR Chief Economist Lawrence Yun, "Despite the modest monthly increase, contract signings remain well below normal historical levels... A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect."
- We concur that there is unlikely to be a turnaround unless interest rates fall substantially, but we would also add, a rise in unemployment could play a factor in unlocking activity too.
- As a leading indicator of existing sales activity, the pending index continues to bodes poorly for home sales - see chart.
- Separately, NAR appears to be optimistic on the outlook for this year: "NAR forecasts mortgage rates will average 6.4%, existing-home sales will increase by 6%, new-home sales will improve by 10% and the national median home price will rise by 3% in 2025."
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SCANDIS: NOKSEK Narrows Gap To Multi-year Support At 0.9500
This afternoon’s pullback in crude oil and natural gas futures (the former in response to the weaker-than-expected US consumer confidence reading) has weighed on the Norwegian krone. NOKSEK is down 0.5% today (now at its lowest since August 5th), narrowing the gap to key multi-year support at 0.9500.
- This level has contained downside in tthe cross on three occasions since March 2023, and also provided strong support back in 2016.
- A clear breach of 0.9500 would signal scope for a deeper retracement towards 0.9274, the June 2020 low.
- Meanwhile, SEK continues to outperform the G10 basket, trading resiliently despite today’s European equity volatility.
- Tomorrow’s Scandinavian calendar includes tier 2 data (Swedish PPI and Norwegian credit growth).
Figure 1: NOKSEK Weekly Chart
STIR: May/June SOFR Put Condor Strip
- +5,000 SFRK5/SFRM5 95.68/95.75/95.81/95.87 put condor strip, 2.5 ref 95.915
US: Navarro Proposes Expelling Canada From Five Eyes, Deepens Rift With Allies
Peter Navarro, the White House senior counselor for trade and manufacturing; one of US President Donald Trump's most important advisors, has proposed expelling Canada from the Five Eyes intelligence sharing alliance, according to FT. The group, which includes the UK, Australia, and New Zealand, is considered a foundational security alliance of the member nations, with nearly all intelligence shared mutually within the group.
- FT suggests that the comment could be designed to pile more pressure on Ottawa to extract concession as the March 4 deadline for a 25% tariff on Canadian imports approaches.
- Trump said yesterday: “We're on time with the tariffs and it seems like that's moving along very rapidly... So, the tariffs will go forward, yes, and we're going to make up a lot of territory…”
- Bloomberg reported: “…following [Trump's] remarks, a US official... said the fate of the special 25% levy on Canada and Mexico — tied to border security demands — was still to be determined."
- The threat comes amid a major shake-up of the postwar Western alliances, with the presumptive next Chancellor of Germany, Friedrich Merz, suggesting that the US could be cut out of NATO: "I never thought I would have to say something like this on a television program. But after Donald Trump’s statements last week at the latest, it is clear ....this administration, [is] largely indifferent to the fate of Europe.”
- ABC reports that Trump's approach to foreign policy has prompted concerns in Australia that both FVEY and AUKUS could collapse amid an isolationist pivot from Washington.
