Pending Home Sales rounds out weaker housing data in US

US pending homes sales for June released today were -8.6% MoM after an expectation of only -1.5% MoM and a reading of +0.4% MoM in May. The main reason may be due to mortgage rates, which averaged near 5.70% for the month of June. Rates continue to climb into July, with mortgage rates ending the week of July 22^nd at 5.74%, down from 5.82% the prior week. Last week, the US reported existing home sales for June at -5.4% MoM vs -1.8% MoM expected and -3.4% MoM in May. Housing starts and building permits also continued to decline during the month of June.

Although the FOMC hiked rates by 75bps to bring the Fed Funds rate to the 2.25%-2.50% range, the 10-year yield is little changed. It is currently is hovering near the 2.74%/2.77% area. After moving higher out of a symmetric triangle in early January with rates near 1.5%, 10-year yields moved as high as 3.497% by June 15^th, breaking above 2018 highs. However, yields then moved lower to current levels as the overbought RSI unwound back into neutral territory in a head and shoulders formation. The neckline for the head and shoulders pattern is 2.706%. If yields break below, the target is near the 50% retracement from the low of March 2020 to the highs of June 15^th, near 1.915%. However, in order to get there, yields must first pass through horizontal support at 2.557%, the 38.2% Fibonacci retracement from the previously mentioned timeframe near 2.288% and additional horizontal support at 2.063%. If the neckline holds, yields can bounce to the highs from July 21^st at 3.081%, the 2018 highs at 3.252% and then the June 15^th highs at 3.297%.

Source: Tradingview, Stone X

Trade Interest Rates now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

During the press conference Powell said that it is “likely to be appropriate to slow the pace of hikes as rates get more restrictive”. This briefly sent yields down to test the 2.706% level, however yields have since bounced. If markets see the Fed cutting back the pace of rate hikes, we may see 10-year yields lower, and as a result, housing data may pick up again. However, if data supports the idea that the Fed will continue to raise rates at a clip of 75bps, rates could be back near the June highs in a hurry. This would continue to slow the housing market.

See our complete recap of today’s FOMC meeting here.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.