Rate hike and housing market

Share to Twitter Share to Linkedin Topline A leading indicator for housing market activity—pending home sales—unexpectedly jumped in May and reversed six straight months of declines, according to new data from the National Association of Realtors on Monday, though experts warn that higher mortgage rates will continue to weigh on demand. Key Facts Pending home sales, which measure signed contracts on previously owned and existing properties, unexpectedly rose slightly in May, up 0.7% compared to April and surprising analysts who were largely expecting a drop of up to 4%. Home sales were strongest in the Northeast (up roughly 15%), while other regions like the Midwest and West both saw declines of 1.7% and 5%, respectively. Pending home sales were still nearly 14% lower than they were a year ago—with year-over-year declines in all major regions as buyers have had to contend with rising mortgage rates in 2022. The average interest rate … [Read more...] about Pending Home Sales See Surprise Rebound In May, But Experts Warn Housing Market Is ‘Undergoing A Transition’

Share to Twitter Share to Linkedin As it worked to bring interest rates back toward neutral in the face of too-high inflation, before reassessing conditions, the U.S. Federal Reserve has been somewhat data-independent barring a “break the glass” moment. The Fed appears to have arrived at that moment. The Fed slammed on the inflation brakes hard on June 15, raising rates 75 basis points (bps). This action increases the risk of a policy error: if the Fed overtightens in trying to curb inflation, it could inadvertently slow the economy so much that it induces a recession rather than a “softish” landing. Fed Chair Jerome Powell admitted as much the following week in testimony before the U.S. Senate Banking Committee. When asked if the Fed’s moves could lead to a recession, he replied, “It’s not our intended outcome at all, but it’s certainly a possibility.” Inflation remains a big problem: 8.6% against the Fed’s 2% target is akin to doing 73 miles … [Read more...] about Big Fed Rate Hike Risks Policy Error That Could Lead To Recession

A woman in Mumbai mistakenly gave away her bag of gold jewellery to a beggar (Representative Image) Gold prices edged up on Tuesday as the dollar eased, while investors kept a keen eye on posturing from major central banks on interest rate hikes for a clearer outlook for bullion. A weaker dollar makes greenback-priced bullion more attractive for buyers holding other currencies. [USD/] Spot gold was up 0.2% at $1,841.13 per ounce by 0200 GMT, after largely range-bound trading on Monday. U.S. gold futures firmed 0.1% to $1,842.90. However, benchmark U.S. 10-year Treasury yields rose, capping gains in zero-yielding gold. [US/] "The (gold) market is sitting tight as, after a historic week for global central banks; policymakers will get to explain the reasoning behind their decisions this week," said Stephen Innes, managing partner at SPI Asset Management. Close The U.S. Federal Reserve last week approved its largest interest rate increase in more than a quarter … [Read more...] about Gold inches higher as dollar dips; wider rate-hike narrative in focus

Share to Twitter Share to Linkedin Topline New home sales unexpectedly broke a four-month streak of losses and climbed more than economists projected in May, according to data released Friday, but experts note the reprieve may not last long, citing rising mortgage interest rates that are likely to continue curbing demand—likely pulling down record prices as soon as the end of this year. Key Facts About 696,000 new single-family houses were sold last month on a seasonally adjusted annual basis, climbing 10.7% above the April rate of 629,000 (which was revised up from 591,000) and far surpassing average analyst projections of 587,000, the Census Department reported on Friday. “Don’t be deceived,” Pantheon Macro chief economist Ian Shepherdson said in emailed comments after the report, saying the bounce doesn’t change market outlook given an “astonishing collapse ” in mortgage applications this year as rapidly climbing mortgage rates—now at the … [Read more...] about New Home Sales Unexpectedly Rise But Housing Market Still ‘Cratering’—Here’s When Experts Predict Prices Will Fall

Share to Twitter Share to Linkedin Topline The Federal Reserve’s “heightened sensitivity” to rising inflation expectations could be triggered by a barrage of political ad campaigns that are expected to highlight surging consumer prices ahead of the midterm elections in November, analysts at Goldman Sachs warned on Friday, adding that the central bank may feel “compelled” to keep hiking rates aggressively. Key Facts With the midterm elections looming in November, surging consumer prices will be a major issue for voters—especially as long-term inflation expectations have surged in recent months, according to the latest consumer sentiment survey released by the University of Michigan on Friday. Meanwhile, the Federal Reserve watches long-term inflation expectations closely, and used it in its decision earlier this month to raise interest rates by 75 basis points—the largest increase since 1994. The central bank’s “strong reaction” to the … [Read more...] about Political Ads Targeting Inflation Ahead Of Midterm Elections Could Force The Fed To Keep Hiking Rates: Goldman Sachs

- A + A HONG KONG (June 22): A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom. As central banks around the globe rapidly increase interest rates, soaring borrowing costs mean people who were already stretching to buy property are finally reaching their limits. The effects are being seen in countries such as Canada, the US and New Zealand, where once-hot residential real estate markets have suddenly turned cold. It’s a sharp reversal from years of surging prices fueled by rock-bottom mortgage rates and government stimulus, along with a pandemic that popularized remote work and sent homebuyers on the hunt for bigger spaces. An analysis by Bloomberg Economics shows that 19 OECD countries have combined price-to-rent and home price-to-income ratios that are higher today than they were ahead of the 2008 financial crisis — an indication that prices have … [Read more...] about World’s bubbliest housing markets are flashing warning signs

- A + A (June 22): Federal Reserve Chair Jerome Powell said the Central Bank will keep raising interest rates to tame inflation and conceded that a US recession was “certainly a possibility”. “We anticipate that ongoing rate increases will be appropriate,” Powell said Wednesday in his semiannual testimony to the Senate Banking Committee. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook.” Powell’s remarks largely reiterated comments at a press conference last week after he and his colleagues on the Federal Open Market Committee raised their benchmark lending rate 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%. While Powell told reporters last week that another 75 basis-point increase, or a 50 basis-point move, was on the table for the next meeting in late July, Wednesday’s text made … [Read more...] about Powell sees ongoing rate hikes, says recession a ‘possibility’

Share to Twitter Share to Linkedin Topline JPMorgan Chase—the nation’s largest bank—laid off hundreds of home lending employees Wednesday, Bloomberg reported, as rising mortgage rates and increased inflation continue to cool a once-hot housing market. Key Facts A JPMorgan spokesperson confirmed the layoffs in a statement to Forbes , saying its “staffing decision this week was a result of cyclical changes in the mortgage market.” The company will lay off hundreds of people and reassign hundreds of others, affecting more than 1,000 of its 274,948 worldwide employees, according to Bloomberg, which cited unnamed sources. A spokesperson told Forbes the company was able to “proactively move many impacted employees to new roles within the firm” and is “working to help the remaining affected employees find new employment within Chase and externally.” The layoffs come two months after Wells Fargo reportedly announced it will lay off … [Read more...] about JPMorgan Lays Off Home Lending Employees As Housing Market Cools

Trade Watchlist Portfolio Message Set Alert live bse live nse live Volume Todays L/H More × The ongoing downturn in the domestic stock market has seen nearly 83 percent of the stocks forming the Nifty 500 index, a collection of the biggest companies in the country, deliver flat or negative returns in 2022 so far. Many of these stocks are hovering below their 52-week lows and their 200-day moving average (DMA), data compiled by Moneycontrol showed. So far this year, the Nifty 500 index lost 12 percent, while the BSE Sensex and Nifty 50 have declined nearly 10 percent each. Companies that have seen the most erosion in their stock prices since the start of this year include Dhani Services , Solara Active Pharma , Brightcom Group , Indiabulls Real Estate , Metropolis Healthcare , Hikal , Indiabulls Housing Finance , Dilip Buildcon , Welspun India , Nazara Tech , … [Read more...] about Bear Market Woes: 83% of Nifty 500 stocks give negative returns in 2022

Prateek Agrawal is the Business Head & CIO at ASK Investment Managers “Overall, I would stay focussed on earnings and valuations and policy making in India rather than what is happening elsewhere. This should be especially true because the influence of foreign capital on the Indian market is reducing,"  Prateek Agrawal - Business Head and Chief Investment Officer (CIO) of ASK Investment Managers, told Moneycontrol in an interview. Large FPI selling has been readily absorbed by MFs, insurance, Pension and PF funds and this is a structural change that has taken place, he believes. Agrawal's preferred valuation methodology, at present, is to look at 5-year PE averages and earnings yield to bond yield indicators. "These indicators point to an index target of 18,250 to 18,500 over 2022. This leaves just about 7 percent upside from the present levels," says Agrawal, who has over 27 years of experience in capital markets, with long, distinguished stints in sell side research, … [Read more...] about Daily Voice | With valuations no longer cheap, volatility could recur: Prateek Agrawal of ASK Investment Managers