Latest news with #PantheonMacroeconomics
Yahoo
5 hours ago
- Business
- Yahoo
Consumer spending is weakening, the job market is getting worse, and investors love it
U.S. stock futures were down marginally by 0.2% this morning following another all-time high by the S&P 500 index yesterday. Macro data is starting to look weaker. Consumer spending was down in May and the job market is getting worse for employees. That suggests the Fed may cut rates in September, analysts say, which would be good for stocks. Consumer spending is weakening. The job market is getting worse for workers. And U.S. stock investors are loving it. The S&P 500 rose 0.52% yesterday, hitting an all-time high for the second day in a row. S&P 500 futures were down marginally by 0.2% this morning, premarket, indicating that investors don't anticipate anything dramatic like a mass selloff. Why the joy amid so much impending misery? Because the deteriorating macro picture suggests that the U.S. Federal Reserve may cut interest rates sooner rather than later. And cheap money is usually good for stocks. The stock market is climbing 'the wall of worry,' as Goldman Sachs put it in a note seen by Fortune. A key event will be this week's U.S. jobs report. Pantheon Macroeconomics expects it to be not great: 'We're looking for a 100K increase in June nonfarm payrolls, due Thursday, with private jobs rising at the same pace, as well as an uptick in the unemployment rate to 4.3%, from 4.2% in May. This would signal the labor market is cooling, albeit too slowly for the FOMC to rush ahead and ease policy this month, before it has had more time to gauge the size of the uplift to inflation from the tariffs,' Samuel Tombs and Oliver Allen told clients, referring to the Federal Open Market Committee. Consumer spending is softening too. It decreased by 0.3%, month on month, in May. If inflation remains low, the Fed may move in September, Goldman said. 'We are pulling forward our forecast for the next [Fed rate] cut to September. We had previously expected a cut in December because we thought that the peak summer tariff effects on monthly inflation would make it awkward to cut sooner. But the very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger, and we suspect that the Fed leadership shares our view that tariffs will only have a one-time price level effect. And while the labor market still looks healthy, it has become hard to find a job, and both residual seasonality and immigration policy changes pose near-term downside risk to payrolls,' Jan Hatzius and his team told clients in a note. Here's a snapshot of the action prior to the opening bell in New York: S&P 500 futures were down 0.2% this morning, premarket. The S&P 500 rose 0.52% yesterday, hitting an all-time high for the second day in a row. Japan's Nikkei 225 sold off by 1.24% this morning. Hong Kong's Hang Seng was also down, by 0.87%. The Stoxx Europe 600 was headed down marginally in early trading. This story was originally featured on Sign in to access your portfolio
Daily Mail
a day ago
- Business
- Daily Mail
Housing market reaches milestone last seen in 2009 that's good news for homebuyers
The housing market has reached a milestone it has not seen for 15 years, and it could be good news for buyers. The number of newly built homes on the market is at the highest level it has been since 2009. Home builders are struggling to find buyers in the frozen housing market, as elevated interest rates disincentive existing owners moving, and keep mortgages out of reach for many first time buyers. Coupled with house prices remaining at their most unaffordable level in recent history, the result is an unusually high inventory of new-build homes available. Home builders are offering discounts and perks as they try to offload them, according to Marketwatch. The typical home buyer cannot afford to pay current prices and current interest rates on a mortgage. The average 30-year mortgage rate is at 6.77 percent, as of June 26 and the median price of a new home sold in May was $426,600. The 'Oracle of Wall Street' Meredith Whitney previously told that rates need to drop below 6 percent to kickstart the housing market. 'The big story in the housing sector remains the inventory situation,' Stephen Stanley, chief economist at Santander U.S wrote in a note to investors. Stanley says the inventory is now 'bloated' and has been since last spring when the market tends to pick up pace. Despite builders efforts to entice buyers, success has been limited, according to Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. 'Mortgage rates remain too high for sales to climb significantly higher, while the softening labor market likely will limit the flow of potential home buyers,' Allen wrote in a note. 'With housing payments at an all-time high, many buyers are feeling priced out,' Redfin chief economist Daryl Fairweather told earlier this year. 'But sellers still need to move, which means they're increasingly offering concessions to get deals done — especially on condos and townhomes.' Major builder Lennar have said they will look to lower prices in order to move its existing inventory. And Lennar is not alone. Around 30 percent of builders cut home prices in January, the National Association of Home Builders (NAHB) reported — by an average of 5 percent. Home builders are struggling to find buyers in the frozen housing market, as elevated interest rates disincentive existing owners moving Home builders are offering discounts and perks as they try to offload new homes 61 percent of builders also offered sales incentives in January, the NAHB survey revealed. Incentives include mortgage-rate buydowns and smaller floor plans. Sales of newly built homes did grow in 2024 compared to 2023, according to federal government data, but inventory remains elevated. By contrast, 2024 was the worst year for sales in 30 years for the resale home market. Inventory in the resale home category is also rising, up 16.2 percent from a year ago, which gives buyers more options too. The South and West of the country are the most attractive regions for prospective new construction buyers, a new report from revealed. The regions have larger shares of new build homes available on the market, lower new construction premiums, and more opportunities for mortgage rate buydowns, the report found.
Yahoo
2 days ago
- Business
- Yahoo
China's $47B Housing Crash Just Got Worse
The latest read on China's housing market came in weaker than expected. New-home sales from the country's 100 largest developers slid to 339 billion yuan ($47.3 billion) in June, marking a 23% drop from a year ago, per preliminary data from China Real Estate Information Corp. It's another sign that the four-year real estate downturn isn't done yet. While sales rose 14.7% from May, the uptick may have more to do with seasonality than a real inflection. Analysts tracking the sector say last year's stimulus has largely faded and the drag on consumer confidence remains heavy. Premier Li Qiang has pledged to step in with more housing support, but expectations for a major pivot remain low. According to Pantheon Macroeconomics' Duncan Wrigley, China appears to be settling into a slow recovery mode. That means the government may continue deploying piecemeal policies instead of a big bang bailout. With domestic consumption still fragile and U.S. tariffs putting pressure on exports, the property market is becoming a critical lever in Beijing's economic strategy. The question now is whether they'll act fast enough or let the pain stretch into 2025. For global investors, the implications are growing harder to ignore. Tesla (NASDAQ:TSLA), along with other multinationals tethered to Chinese demand, could see volatility ahead if sentiment deteriorates further. A sluggish housing market not only suppresses spending but also erodes economic momentum across supply chains. If policymakers don't shore up confidence soon, investors may need to reassess risk exposure not just in China, but in global cyclicals that depend on it. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
China Home Sales Slump Persists as Calls Grow for More Stimulus
(Bloomberg) -- China's home sales extended their slump in June, putting further strain on the economy and underscoring the impetus for fresh support measures. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown The value of new-home sales from the 100 largest property companies stood at 339 billion yuan ($47.3 billion), the latest preliminary data from China Real Estate Information Corp. on Monday showed. That represents a 23% fall from a year ago, according to Bloomberg calculations. June's sales follows an 8.6% decline in May. On a monthly basis, however, the latest sales were up 14.7% from May, CRIC said. China's housing downturn has dragged on for four years, as the effects of a stimulus blitz last September wear off. Premier Li Qiang this month pledged more action to revive the market, which analysts say is necessary to boost consumption and offset the threat to exports from US tariffs. 'More support will be needed, but we don't expect a big shift in approach' to housing, Duncan Wrigley, chief China economist with Pantheon Macroeconomics, wrote in a report last week. 'China is resigned to a slow recovery.' Even if China's housing market picks up, the long-term outlook remains grim. Demand for new homes in cities is expected to stay at 75% below its 2017 peak in the coming years, due in part to a shrinking population, Goldman Sachs Group Inc. estimated. --With assistance from Foster Wong. America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Does a Mamdani Victory and Bezos Blowback Mean Billionaires Beware? ©2025 Bloomberg L.P. Sign in to access your portfolio
France 24
5 days ago
- Business
- France 24
US Fed's preferred inflation gauge picks up as tariff effects loom
The personal consumption expenditures (PCE) price index climbed 2.3 percent last month from a year ago, the Commerce Department said in a report. This was in line with analyst expectations and a slight acceleration from April's 2.2 percent increase. But excluding the volatile food and energy sectors, the PCE price index was up 2.7 percent, rising from April's 2.6 percent uptick, the report showed. But consumer spending declined, after Trump's fresh tariffs in April dragged on consumer sentiment. PCE dropped by 0.1 percent from the preceding month, reversing an earlier rise. While Trump has imposed sweeping tariffs on most US trading partners since returning to the White House in January -- alongside higher rates on imports of steel, aluminum and autos -- these have had a muted effect so far on inflation. This is partly because he held off or postponed some of his harshest salvos, while businesses are still running through inventory they stockpiled in anticipation of the levies. But central bank officials have said they expect to learn more about the impact of tariffs over the summer, meaning they will be scrutinizing data in the coming months. 'Clear weakening' "The experience of the limited range of tariffs introduced in 2018 suggests that pass-through to consumer prices is intense three-to-six months after their implementation," warned economists Samuel Tombs and Oliver Allen of Pantheon Macroeconomics in a note. They also flagged weakness in consumer spending, in part due to a pullback in autos after buyers rushed to get ahead of tariffs. But spending on services was tepid even after excluding volatile components, they said. "There has also been a clear weakening in discretionary services spending, notably in travel and hospitality," said Michael Pearce, deputy chief US economist at Oxford Economics, in a note. This reflects "the chilling effect of the plunge in consumer sentiment," he added. Between April and May, the PCE price index was up 0.1 percent, the Commerce Department report showed. As a July deadline approaches for higher tariff rates to kick in on dozens of economies, all eyes are also on whether countries can reach lasting trade deals with Washington to ease the effects of tariffs. For now, despite the slowing in economic growth, Pearce said risks that inflation could increase will keep the Fed on hold with interest rates "until much later in the year."
