The US economy is starting to show signs of stress in the housing sector again. After yesterday’s S&P/Case-Shiller index showed that housing prices dropped to their lowest post-crisis (2008) levels, today’s Pending Home Sales reading for April has solidified concerns. From March, sales dropped by 5.5 percent, while on a yearly-basis sales increased by 14.7 percent. According to a Bloomberg News survey, market participants were expecting no change in the monthly reading, but were anticipating a massive 22.0 percent increase year-over-year. Even in comparison to the prior figures, which were revised down to 3.8 percent m/m (from 4.1 percent) and 10.5 percent y/y (from 10.8 percent), it’s clear that this report was all-around disappointing.
Sterling Weakens on Marginally Softer UK Inflation Report
UK CPI as expected on the month, weaker on the year -> Eurozone developments overshadow UK growth prospects -> Cable falls on CPI release
UK inflation in April came in as expected on the month at 0.6%, the UK stats bureau said today. The consumer price index rose 3.0% when compared to April 2011, which was softer than the expected 3.1% rise.
The Bank of England’s most recent monthly report said inflation is expected to fall down below the bank’s target of 2% over the next two years.
U.S. Dollar Extends Gain after April New Home Sales Exceed Forecast
THE TAKEAWAY: U.S New Home Sales Rose 3.3 Percent in April> Recovery in Housing Market Helps Boost Economic Growth > U.S. Dollar Extends Gain
Purchases of new single-family houses in the U.S. bounced back more than forecast in April after hitting four-month low in March. Coupled with rebound in April existing home sales, a surge in new home salesfuels investors’ optimism over recovery in the world’s biggest economy since animprovement in the housing market helps boost consumer expenditure and spur demand in durable goods in coming months.