Consumer Economy
Durable Goods, New Orders (DGORDER); $311B -32.1B (-10.30% m/m)
Existing Home Sales (EXHOSLUSM495S); 3.93M -110.0K (-2.80% m/m)
New Home Sales (HSN1F); 627k +4K (0.64% m/m)
Median New Home Sales Price (MSPNHSUS); $401.8K -20.9K (-5.20% m/m)
Months of Home Supply (MSACSR) 9.8 months
There was a plunge in durable goods orders; it retraced much of the big increase (+48M) that happened last month. That said, durable goods orders remain in an uptrend, so, not recessionary.
There was also a drop in new home sales prices – it is not far from a 4-year low.
New home sales (in units) inched higher, but it is hovering around a 2.5-year low; existing home sales (in units) fell slightly; it is bouncing along 8-year lows.
The housing market continues to look pretty horrible. Home supply at 9.8 months usually happens only in recessions.
Here’s the 30-year mortgage rate (black line) vs existing home sales (red line). High mortgage rates = lower home sales, because nobody can afford to buy homes at these rates.
Credit & Rates
Total Bank Credit (TOTBKCR) 18.55T +11.6B (+0.06% w/w, 3.12% annualized)
Fed Balance Sheet (WALCL) 6.66T -1.6B (-0.02% w/w, 1.04% annualized)
30-Year Mortgage Rate (MORTGAGE30US) 6.74% -1 bp
10-Year Treasury (DGS10); 4.40% -4.0 bp
Bank credit didn’t grow much; that’s mildly recessionary. And there was not much QT either.
Money moved into bonds this week. Both the short end and the long end saw some modest yield declines.
CME Fedwatch Tool projects just a 4% chance of one cut on this week’s July 30th meeting. That said:
On Sep 17: 64.5%
On Oct 29: 81.2%
Rate cuts should happen in about six weeks. Trump doesn’t have time to visit Fort Knox, but a tour of the Fed remodeling project (to nudge Powell into dropping rates) was no problem at all. See Powell’s face in this clip – he has a gun to his head. He’s absolutely not used to this.
President Trump tours the Federal Reserve, ratcheting up pressure on Chair Jerome Powell [July 25, 2m]
(source – ABC)
Currencies
The buck started to turn back into confetti again this week, falling 0.80 [-0.81%] to 97.40.
by irishprince 
