Current position: Carefully Floating
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Stocks and mortgage bonds are trading lower to start the day, following a surprise 25bp hike from the RBA (Reserve Bank of Australia).
CoreLogic Home Price Insights
CoreLogic reported that home prices rose 1.2% in April, beating estimates of 0.8%, and are now up 2.0% year-over-year, which is down from 3.4% on tough comps. This comes after rising 1.6% in March; we are clearly at a turning point in the housing market.
CoreLogic forecasts that home prices will rise again in May by 0.9% and by 4.6% over the next 12 months.
Black Knight
Black Knight just reported that home prices rose 0.5% in April, following a 0.5% rise in March. Home prices have clearly reached an inflection point and are back on the rise again. If we were to annualize the readings we’ve gotten so far this year, we would see a 4.5% gain. According to Black Knight, "Prices are now almost universally rising again on a seasonally adjusted basis, with the exception of Austin, the only market with for-sale inventory back above pre-pandemic levels, which has faced significant price corrections continuing into spring."
ISM Services PMI-May
The ISM Services PMI fell from 51.9 in April to 50.3 in May, which was below estimates of 52.2 Prices Paid fell 3.4 points to 56.2 and is the lowest level seen in 3 years. Employment fell back into contraction, from 50.8 to 49.2, which is the lowest since June 2022.
Technical Analysis
Mortgage bonds are lower following another 25bp hike from the Reserve Bank of Australia, but bonds are well off their lows from earlier this morning. MBS are trading near the top of an extremely wide range, with support at 99.125 and resistance at 99.845.
The 10-year is trading at around 3.70% and in a wide range of its own, with a ceiling at 3.77% and support at 3.644%. Carefully Floating.
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