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Market Matters, July 20, 2019 Edition


Economic data remains overly mixed while trade talks continue to be of concern in global markets. Interest rates have continued to stay lower with the 10yr having a hard time straying from a 2% yield. The Fed is on watch now as we head into the last two weeks until their July meeting, where it’s expected that we see a 25bps rate cut.
Housing Starts/Permits
Housing starts for June declined -.9% to a 1.253mln unit rate, while building permits fell by -6.1% to a 1.22mln rate.
Single-family starts rose 3.5% in June, while multifamily housing starts dropped 9.2%. The weakness was seen in the West with starts down 4.9% and permits down 7.9%, and in the South, down 9.2% in starts and down 10.4% in permits. One data point that stood out was that multifamily starts in the South dropped 22.6%.
Retail Sales
Retail Sales came in hot in June, up 0.4% MoM versus the market consensus of +0.2%. Retail Sales excluding autos was +0.4% MoM, while the control Retail Sales was up 0.7%, beating expectations of +0.3%. The three-month annual rate for the control Retail Sales is up 7.1%, which suggests a strong consumer and should meaningfully raise GDP tracking estimates.
Import Prices
The Import Prices Index for June fell 0.9%, missing expectations of -0.7%, while export prices were down 0.7%, also lower than expectations of -0.2%. Excluding fuels, import prices were down 0.3% for June, this is the fourth consecutive month the series has been negative, which is the first time that has happened since 2016.
NAHB Housing Index
The NAHB Housing Market Index rose to 65 in July, beating expectations of an index reading of 64. The current sales index came in at 72, while the six-month ahead sales index is at 71, and the traffic index at 48. Looking at the regional numbers, the Northeast came in down 2 to 57, the Midwest was down 4 to 54, the West rose 6 to 75, and the South came in up 1 point to 69. The NAHB Chair complained of a lack labor and buildable lots, contributing to high building costs.
Consumer Sentiment
The Univ. of Michigan Consumer Sentiment pre-lim read for July posted at 98.4, right on with expectations of 98.5. For the early July survey, economists expect the index to rise +.3 points to 98.5 from June’s 98.2, the current conditions index to add .1 points and the expectations index to gain .4 points. These estimates on headline are still well below the 100.0 final read back in May.
Call today to discuss this week’s market trends.
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Pam Jamison
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