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’
Rate hike on markets
Unemployment Will Rise And ‘Extreme’ Price Pressures Continue As Fed Hikes Risk Recession, S&P Warns
Share to Twitter Share to Linkedin Topline Economists at S&P Global Ratings on Monday warned the likelihood of a recession over the next year is increasing as the Federal Reserve continues its most aggressive economic tightening cycle in decades—becoming the latest experts warning about the potential implications of rising interest rates, which help ease prices at the expense of economic growth. Key Facts In a research note published Monday, a team of economists led by S&P’s Beth Ann Bovino said aggressive Fed policy spurred by ongoing price spikes will usher in low economic growth this year and potentially risk a recession, defined as two consecutive quarters of negative gross domestic product. S&P forecasts that U.S. GDP will grow at an annual rate of 2.4% this year and 1.6% next year—down from forecasts last month calling for growth of 2.4% and 2%, respectively. Even the labor market, which has posted a remarkably strong … [Read more...] about Unemployment Will Rise And ‘Extreme’ Price Pressures Continue As Fed Hikes Risk Recession, S&P Warns
ECB to activate first line of defence in bond market on July 1
- A + A SINTRA/FRANKFURT (June 27): The European Central Bank (ECB) will activate the bond-purchasing firepower it has earmarked as a first line of defence against a possible debt-market crisis on Friday (July 1), according to President Christine Lagarde. Applying "flexibility" to how reinvestments from the ECB's €1.7 trillion (US$1.8 trillion) pandemic bond-buying portfolio are allocated is aimed at curbing unwarranted turmoil in government bonds as interest rates are lifted from record lows to curb unprecedented inflation. Net buying under a separate asset-purchase programme is also set to end on Friday — potentially exposing some of the eurozone's more-indebted nations to speculative attacks by investors. "We have decided to apply this flexibility in reinvesting redemptions coming due in the PEPP portfolio as of July 1," Lagarde said on Tuesday in a speech in Sintra, Portugal, where the ECB is holding its annual retreat. "We will ensure that the orderly … [Read more...] about ECB to activate first line of defence in bond market on July 1
Lagarde vows nimble ECB policy as July hike plan proceeds
- A + A (June 28): European Central Bank (ECB) president Christine Lagarde affirmed plans for an initial quarter-point increase in interest rates in July but said policymakers are ready to step up action to tackle record inflation if warranted. Speaking at the ECB’s annual retreat in Sintra, Portugal, Lagarde offered reassurances that a new anti-crisis instrument yet to be announced won’t stand in the way of tackling the fastest surge in consumer prices since the euro was introduced. Her remarks underline the ECB’s base case for normalising monetary policy as some officials float the idea of moving more aggressively. Governing Council member Martins Kazaks said earlier on Tuesday (June 28) that “front-loading” hikes, including a possible larger move next month, could be reasonable. Traders brought forward bets on rate increases, but only see a 25% chance of a half-point hike in July. “There are clearly conditions in which gradualism would not be appropriate,” … [Read more...] about Lagarde vows nimble ECB policy as July hike plan proceeds
Can India adopt a Fed-style dot plot for interest rates? Not yet, say experts
Issues ranging from differences in the nature and availability of data in India and an uncertain global and domestic economic outlook loom as hurdles in the Reserve Bank of India (RBI) adopting a Federal Reserve -style “dot plot,” economists say. The dot plot is a chart that records each Fed official’s projection for the US central bank’s key short-term interest rate. The dots reflect what each thinks will be the appropriate midpoint of the Fed Funds Rate at the end of each calendar year three years into the future should the economy behave as they expect. "The dot plot is a good policy guidance to the market on what lies ahead and hence helps in minimising volatility,” Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, said. “However, in this highly uncertain environment when sources of inflation are mostly idiosyncratic and supply-led, a Fed-like guidance of three-to-four years does not seem feasible.” The debate on whether India should adopt a dot plot-like … [Read more...] about Can India adopt a Fed-style dot plot for interest rates? Not yet, say experts
What the Business Cycle is Telling us About a Recession
If you're looking for capitulation in 2022, it's in the bond market. And that tells you that investors' confidence in the global economy is very low. Inside the stock market, it's all about defense. Defensive stocks, which include big healthcare companies and dividend-paying value stocks, have been driving the gains. An index of global defensive stocks put together by Goldman Sachs, which is heavy in healthcare giants, has climbed to more than an 18-month high relative to the MSCI AC World Index. Inside the U.S., the defensive ETF ticker DEF has been outperforming the Spider ETF SPY all last week and all year. For market watchers, this feels a whole lot like a recession trade. While investors in the capital markets are battening the hatches for a recession, money in the private markets is also drying up. The value of venture capital deals in the U.S. dropped more than 25% in the second quarter to just $1 trillion, according to Dealogic . M&A activity in the United States … [Read more...] about What the Business Cycle is Telling us About a Recession
Cathie Wood Claims Economy Already In A Recession—Warns Inflation And Inventories Pose ‘Big Problem’
Share to Twitter Share to Linkedin Topline High-profile stock picker Cathie Wood conceded to being wrong about the duration of high inflation that's contributed to her fund's steep decline this year while doubling down on her belief that the economy has fallen into a recession—defying a vast majority of experts noting a recession is unlikely this year despite growing odds of one next year. Key Facts “We think we are in a recession,” Wood, the founder and CEO of New York City's Ark Invest, said on CNBC's Squawk Box Tuesday, noting that excess inventory driving up costs and leading to wider-than-expected profit shortfalls for corporations like Walmart and Target is a "big problem" facing the economy. Wood first declared the U.S. had fallen into a recession last week, warning on Twitter that massive inventories (often viewed as a leading indicator for demand) have the potential to unwind and hurt growth for the rest of the year, as consumer … [Read more...] about Cathie Wood Claims Economy Already In A Recession—Warns Inflation And Inventories Pose ‘Big Problem’
Dow, S&P boosted by banks; cautious on consumer confidence data
- A + A NEW YORK/BENGALURU (June 28): Bank shares boosted the Dow Jones and the S&P 500 indexes on Tuesday, as the big four lenders raised dividends following a stress test, but a sharp drop in consumer confidence brought to fore the risks from rising inflation. Wall Street's main indexes started the week on soft footing on worries of rising prices and an aggressive Federal Reserve dominated sentiment. Economic data remains at the forefront of investors' focus amid few market moving catalysts till the start of earnings season in two weeks. The Conference Board said its consumer confidence index dropped 4.5 points to a reading of 98.7 this month, as worries about high inflation left consumers anticipating that economic growth would weaken significantly in the second half of the year. Investors are now looking at data to determine whether the economy can withstand large interest rate hikes by the US central bank to stamp out inflation. "People are coming into … [Read more...] about Dow, S&P boosted by banks; cautious on consumer confidence data
Cathie Wood Claims Economy Already In A Recession—Warns Inflation And Inventories Pose ‘Big Problem’
Share to Twitter Share to Linkedin Topline High-profile stock picker Cathie Wood conceded to being wrong about the duration of high inflation that's contributed to her fund's steep decline this year while doubling down on her belief that the economy has fallen into a recession—defying a vast majority of experts noting a recession is unlikely this year despite growing odds of one next year. Key Facts “We think we are in a recession,” Wood, the founder and CEO of New York City’s Ark Invest, said on CNBC's Squawk Box Tuesday, noting that excess inventory driving up costs and leading to wider-than-expected profit shortfalls for corporations like Walmart and Target is a “big problem” facing the economy. Wood first declared the U.S. had fallen into a recession last week, warning on Twitter that massive inventories (often viewed as a leading indicator for demand) have the potential to unwind and hurt growth for the rest of the year, as consumer … [Read more...] about Cathie Wood Claims Economy Already In A Recession—Warns Inflation And Inventories Pose ‘Big Problem’
Singapore’s surging rents shock expats and encourage scammers
- A + A SINGAPORE (June 28): When Canadian expat Michelle went to renew the lease on her three-story house in Singapore in May, her landlord wanted to raise the rent by almost 40%. Michelle tried to negotiate but the owner wouldn’t budge on the S$10,000 (US$7,200) a month asking price. She’s moving her family into a three-bedroom apartment next month. “I took what I could get,” said Michelle, who asked not to use her full name on concern it may impact her business in the city-state. There’s “a lot of greed at the moment.” Rents are skyrocketing in Singapore, particularly in the prime accommodation favored by expatriate residents, as surging demand from locals and newer arrivals collides with pandemic-induced delays in supply. Rental prices for the private properties leased by expats are rising on average by 20% to 40%, according to 10 real estate agents interviewed by Bloomberg , though some landlords are even asking for double the previous rent. The island’s … [Read more...] about Singapore’s surging rents shock expats and encourage scammers