1)Pending home sales in May, measuring contracts signed of existing homes, rose 1.1% m/o/m as expected. Sales in the Northeast rebounded by 3.5% after 3 straight months of declines. Sales also were up in the Midwest but flat down South and lower out West.
2)Refi’s still are responding the most to the drop in mortgage rates as they grew by 3.2% w/o/w and 92% y/o/y.
3)Core durable goods orders rose .4% m/o/m in May, above the estimate of up .1% while the 1% drop in April was left unrevised. Versus the same month last year, this capture of capital spending is up just 1% though. Shipments of core goods rose .7%, 6 tenths more than expected and April was revised up by 4 tenths. The issue however was the .5% rise in inventories which kept the inventory to shipments ratio at 1.67, matching the most since November 2016.
4)The PCE inflation data for May was about as expected with the core rate up 1.6%, one tenth more than estimated but the same rate seen in April. The headline print of up 1.5% was as forecasted.
5)Income growth in May was .5%, two tenths more than expected but the private sector component was higher by just .2%. Private sector wage growth was up 3.7% y/o/y, pretty much smack in the 3.5-4% range seen in the prior six months.
6)Spending was higher by .4% m/o/m, one tenth less than forecasted but that was more than offset by a 3 tenths upward revision to April. Taking income and spending together left the savings rate unchanged at 6.1%, the lowest since November. On a real basis, spending is up .2% m/o/m for the first two months of Q2 which is pretty much as expected.
7)Good for first time buyers, S&P CoreLogic said the home price gain in April was 3.5%, the slowest since 2012.
8)The final UoM June consumer confidence index was slightly higher than the original at 98.2 from 97.9 initially. The estimate was for no change and down from 100 in May. The components were mixed as current conditions rose while expectations fell. One year inflation expectations were 2.7% vs 2.9% in May and 2.5% in April. See below the spike in inflation expectations in the Conference Board’s figure. The UoM bottom line: “June’s small overall decline was entirely due to households with incomes in the top third of the distribution, which fell by 8.6 index pts from May, while households with incomes in the bottom two thirds rose by 2 index pts…More importantly, upper income households more frequently mentioned the negative impact of tariffs, citied by 45% of those with incomes in the top third, up from 30% last month. Most of the June slippage was concentrated in prospects for the national economy, with the unemployment rate expected to inch upward instead of drifting downward in the year ahead.”
9)In the Eurozone, June core CPI rose 1.1% y/o/y vs the estimate of 1% and up from .8% in May. The headline rate was up by 1.2% y/o/y as expected. Services inflation of 1.6% helped lift that core rate.
10)French consumer confidence in June rose 2 pts to match the highest since January 2018 as it continues to recover post Yellow Vest protests.
11)Inflation in Japan remained benign in June. In Tokyo, CPI ex food rose .9% y/o/y as expected and .8% y/o/y ex food and fuel.
12)Exports in Vietnam in June jumped 8.5% y/o/y. Industrial production there was higher by 9.6% y/o/y. Impressive numbers.
13)The Hong Kong trade data for May was a bit better than expected but still down y/o/y. Exports fell 2.4% y/o/y, a similar pace seen in April but less of a decline than the 4.5% expected. Specifically, exports fell 4.1% to China, were down by 15% to the US and lower by 17% to Germany. This is the 7th straight month of y/o/y drops. Imports fell 4.3% y/o/y vs the forecast of down 5.8%.
1)Initial jobless claims totaled 227k, 7k more than expected and up 10k from the week prior. This print is a 7 week high and brings the 4 week average to 221k from 219k, a 6 week high. Continuing claims, delayed by a week, rose by 22k but the week before it fell by 34k.
2)The Vistage CEO Confidence Index of more than 1400 CEO’s of small and mid sized companies saw their 2nd quarter index fall to the lowest level since Q4 2009. The same guy who runs the UoM consumer confidence #, Richard Curtin, also helps with this survey. He said “Damage done to the economy from the tariffs, the slowdown in job growth as well as heightened economic uncertainty has been substantial. Despite these concerns, firms still held net favorable views that the Trump administration has helped their business.”
3)The Conference Board’s index of consumer confidence in June fell to 121.5 from 131.3 in May. That was about 10 pts below what was expected and is the lowest since September 2017. Also, both key components of the Present Situation and Expectations were down m/o/m. Notable was the answer to the labor market questions, especially those that said jobs are Hard to Get which rose 4.6 pts to the highest since November 2017. Those that said jobs were Plentiful fell 1.3 pts to a 3 month low. The Conference Board said “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence.” Finally, one year inflation expectations jumped to 5.1% from 4.6%, matching the highest since March 2015. Inflation is dead?
4)New home sales in May totaled 626k, well below the estimate of 684k while April was revised up by 6k to 679k. That’s the weakest print since December with particular weakness out west where sales fell by 70k m/o/m (California?). Sales in the Northeast fell too (SALT cap?) while rising down South and in the Midwest. Months’ supply rose to 6.4 from 5.9 as the number of homes rose at the same time sales fell. The median home price was $308k, down 2.7% y/o/y as there was a sales increase of those homes priced below $300k and less priced above.
5)Mortgage applications to buy a home fell .9% w/o/w notwithstanding another big drop in mortgage rates to just 4.06%. That said, sales are still up 9.2% y/o/y but that’s not a hard accomplishment considering that one year ago the average 30 yr rate was at 4.84%.
6)The Dallas manufacturing index for June fell to -12.1 from -5.3. The estimate was -2.0. That’s the weakest print since June 2016. The 6 month outlook went negative at -2.7, the lowest since January 2016.
7)The Chicago manufacturing index also fell into contraction territory in June at 49.7 from 54.2 in May. The estimate was 53.5. There was a specific question about the impact of tariffs and “80% of firms said that they were negatively impacted, with tariffs raising prices of their goods leading to a pullback in orders.” MNI also said in the release about the overall environment, “With customers rethinking their purchases, demand tumbled, and consequently firms pulled back production, weakening overall business sentiment.”
8)The Richmond manufacturing index fell to 3 from 5 which was about as expected and matches the lowest since January. The KC manufacturing index went to zero from +4.
9)Good for Austria but terrible for investors and reflecting the bizarro world of negative interest rates and central bank extremism, Austria sold 1.25b euros more of 100 yr bonds that was 4 times oversubscribed and priced to yield just 1.17%. At a yield of -.435%, Austria also sold a 5 yr bond of 3b euros where there were bids for 23b. That rate is less than the ECB deposit rate.
10)Economic confidence in the Euro area continued to weaken in June. The index fell to 103.3 from 105.2 and that was 1.5 pts below the estimate and the lowest since August 2016. There was further softness in manufacturing (lowest level since September 2013) and that spilled over to a drop in services while consumer confidence also slipped. Gains though were seen in retail sales and construction with the latter helped by disappearing bond yields.
11)The German consumer confidence figure for July (thus expectations) fell to 9.8 from 10.1, the lowest since April 2017.
12)Germany’s IFO business confidence index for June fell .5 pt m/o/m to 97.4 but that was as expected. This is the weakest level since November 2014. The weakness was all in the Expectations component while the Current Assessment was little changed. The IFO said succinctly, “The German economy continues to slow down.”
13)French June business confidence was unchanged m/o/m at 106 but manufacturing confidence continued to fall as it was down 2 pts m/o/m when no change was expected. Services and employment confidence helped to offset the weakness in manufacturing, a trend we’ve seen in the US and elsewhere.
14)The UK CBI retail sales figure was a disaster for June. The index fell to -42 from -27 and well worse than the estimate of -5. That is the lowest print since March 2009 during you know what.
15)Industrial production in South Korea in May fell 1.7% m/o/m, worse than the estimate of down .6% and only partially offset by a 3 tenths upward revision to April. Capital spending fell 8.2% m/o/m.
16)In Japan, its unemployment rate in May held at the still very low 2.4% but there was a down tick in the jobs to applicant ratio to 1.62 from the 45 yr low of 1.63 in the month prior.
17)Retail sales in May in Japan rose .3% m/o/m, half the estimate of up .6% and April was revised down by a tenth.