Another very ugly US housing data release
Head of Macro Analysis
Summary: The evidence of something seriously amiss with the US housing sector – and thereby the US economy itself – just keeps on stacking up. Between them, these indicators could make the Fed hit the pause button.
We got another interesting data print today about the US real estate market. The National Association of Realtors’ Pending Home Sales, which is a leading indicator of housing activity, was very ugly. In October, it fell 2.6% M/M versus 0.5% expected (chart 1).
Fed chair Powell hinting at “wait and see” mode yesterday was certainly a consequence of the acceleration of the slowdown in the housing market. Since the beginning of the year, housing numbers have been softening very sharply.
It constitutes another headwind, along with strong USD, turmoil in the equity market and a rising budget deficit, that is expected to push the Fed to pause monetary policy after December hike.
As we have pointed out many times over the past few months, the Fed's monetary policy is certainly already too tight (chart 2), which increases the risk of financial and economic turbulence due to the high level of indebtedness.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)