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22 Apr 2015
US March existing home sales rise strongly - is the soft patch over? – ING
FXStreet (Barcelona) - Previewing the US March existing home sales data, Rob Carnell of ING, comments that it won’t be wise to declare this as an end to the soft patch of the US economy, but a stronger USD and higher yields might be expected from here.
Key Quotes
“US existing home sales for March rose to a 5.19m annual rate, a good deal above the 5.03m expected and one of the strongest results this side of the financial crisis (November 2009 saw a 5.44m rate, and July 2013 a 5.31m rate). Whilst this is noisy data, with the volatile condo segment growing at an 11.1% rate against a still strong 6.1% rise in single family homes, this was still a decent result.”
“But with housing transactions a slow moving part of the economy, it is probably not wise to declare the US soft-patch over just yet, though there were also some encouraging increases in median house prices, which should help to support consumer confidence and spending in the coming months.”
“That said, with next week’s FOMC meeting closing in, and limited additional data in advance of this, we see little likelihood that this result is enough to warrant a hint at a policy change in June from the accompanying April FOMC text.”
“The market response to this data should be a stronger USD and higher bond yields and implied Fed rates. But with this result fairly marginal for the Fed decision, we don’t think any market response will be substantial, or necessarily long-lived.”
Key Quotes
“US existing home sales for March rose to a 5.19m annual rate, a good deal above the 5.03m expected and one of the strongest results this side of the financial crisis (November 2009 saw a 5.44m rate, and July 2013 a 5.31m rate). Whilst this is noisy data, with the volatile condo segment growing at an 11.1% rate against a still strong 6.1% rise in single family homes, this was still a decent result.”
“But with housing transactions a slow moving part of the economy, it is probably not wise to declare the US soft-patch over just yet, though there were also some encouraging increases in median house prices, which should help to support consumer confidence and spending in the coming months.”
“That said, with next week’s FOMC meeting closing in, and limited additional data in advance of this, we see little likelihood that this result is enough to warrant a hint at a policy change in June from the accompanying April FOMC text.”
“The market response to this data should be a stronger USD and higher bond yields and implied Fed rates. But with this result fairly marginal for the Fed decision, we don’t think any market response will be substantial, or necessarily long-lived.”