WASHINGTON (MaceNews) –It’s housing week coming up for U.S. economic data and analysts will be checking new housing completions Tuesday, a much more telling number than starts these days.
Completions run several months behind starts which tabulate the stage before construction. It’s completions which calibrate the pipeline to an existing home sale, something that often awaits a new house.
In their comments this past week Federal Reserve Chair Jay Powell and Treasury Secretary Janet Yellen had no solutions to offer to what they acknowledged is an affordability-hampered housing market. In the near-term only an acceleration in completions can even partially relieve the supply crunch, particularly for starter houses.
In May completions were running at a 1.368 million annual rate, at least a few hundred thousand short of anything approaching a balanced market and well under the 1.572 million rate for starts.
The June existing home sales report from the National Association of Realtors is Thursday after four previous months of decline despite historically low mortgage rates. Again, lack of inventory and falling affordability blamed.
The National Association of Home Builders July index is Monday. In June the outlook of the home construction industry slipped a couple of points to a still very high 81.
None of the upcoming week’s housing data is likely to have much effect on the confused market mood. The bad news has been the good news as well, a mounting wall of worry. Concerns can ruffle stocks as happened Friday but they build in a governor on ebullience. Hoards of cash could superheat so a restraining influence is for many market veterans a welcome trend.
The reimposition of an indoor mask mandate in Los Angeles county for everyone was part of it. The rising Covid cases in many states, increasingly affecting children, will likely weigh more and more on the minds of investors too, particularly if mandates spread and the death toll continues to rise. At some point caution tends to jell on Main Street and Wall Street.
Also nagging away – despite all the reassurances it’s only a reflection of a world awash in liquidity – is that U.S. benchmark 10-year yield, ending the week at 1.294%, with the suspicion being it’s sending a message that we haven’t yet decoded. It doesn’t quite fit with those other fears, that the Fed will begin tapering sooner rather than later. Even once begun, a lot of tapering will have to happen before it becomes anything approaching tightening. As more jobs are filled, can interest rates remain subdued?
The spigot of Fedspeak is firmly off in this blackout week as everyone wonders what the next FOMC’s discussion of tapering will amount to, if anything.
Even currently accelerating inflation fails to banish worries about some deflation hiding in the unknowable future data. Analysts started to name-drop the Manheim Used Vehicle Value Index in midweek, which signaled a decline in June wholesale used-car prices, even as lumber prices fell another 30% this past week – and are now down 51% in three months.
The meeting coming Monday on stablecoin among the agencies within the President’s Working Group on Financial Markets cast a shadow on the crypto world as government regulators race to catch up to what they’ve determined is a pell-mell proliferation of private money that they know has to be brought within some new guard rails.
Moving money is a very big deal and the Fed’s heavy investment in the FedNow instant payments system is still months away from paying off as blockchain’s advantages seem to make it increasingly redundant.
Bitcoin, the volatile opposite of stablecoin, stayed above $30,000 but not by much, now up just 9.4% for this year and marked by Powell as a total failure as a payments mechanism except for ransomware collections. The burgeoning miner operations springing up in middle America far from their China origins holds hope for some communities looking for any source of revenue.
Yet the word “fragility” increasingly pops up in the same sentences as cryptocurrencies. But demand, irrespective of net value, will keep it going even if it makes no more fundamental sense than growing corn for ethanol does for the nation’s energy budget.
The Wednesday deadline for the procedural votes that will keep the infrastructure and the massive Build Back Better reconciliation packages alive will help determine how soon the debt-limit impasse couldl threaten to paralyze Treasury issuance. If the votes fail, that may ensure much of August will not be vacation time for Congress. And that means the debt-limit will not have to be disposed of in the next couple of weeks. Treasury has warned its “extraordinary measures” can’t be allowed to run out when Congress is gone.
Inflation, deflation, tapering, lockdowns? Investors and analysts are at sea, trying to apply tried and true metrics about value and growth to a market environment that is in a whirlwind of different modes altogether. What is certain is that for the medium term, a lot of money wants to chase winners while the Reddit crowd just revels in the chase. All the little plausible scenarios will eventually congeal into a new big picture. But when?
The upcoming week’s few data points are listed below:
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, July 19 – 10a ET NAHB July home builders index (81 June)
Monday, July 19 – 3p ET US Treasury 3Q Borrowing Requirements
Tuesday, July 20 – 8:30a ET US June housing starts (May 1.57 mln SAAR)
Tuesday, July 20 – 8:55a ET Redbook wkly retail sales (prvs +14.0%)
Wednesday, July 21 – 7a ET US MBA wkly mortgage apps (prvs +16.0%)
Wednesday, July 21 – 8:30a ET US Treasury Qutly Refunding Announcement
Wednesday, July 21– 10:30a ET US EIA weekly oil stocks (prvs -7.9 mln bls)
Thursday, July 22 – 10a ET US NAR June existing home sales (May -0.9%)
Thursday, July 22 – 10a ET US June Conf Board Leading Economic Indicators (+1.3%/May)
Thursday, July 22 – 8:30a ET wkly Initial jobless benefit claims (prvs 360K)
Thursday, July 22 – 8:30a ET ChiFed Nat’l Activity Index (prvs 0.29)
Friday, July 23 – 9:45a ET Markit prelim July mfg PMI (May 62,1; svcs 64.6)
Friday, July 23 – 1 ET Baker-Hughes oil rig count (prvs US 484, +5)
—
Contact this writer: denny@macenews.com.
Content may appear first or exclusively on the Mace News premium service. For real-time delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.