A big disappointment from the housing sector and not for the first time: a drop to 406K. This is a drop of 8.1%, which sounds a lot but it’s actually even worse if we take into account the huge downwards revision from 485K to 442K. It’s just bad no matter how we look at it. New home sales were expected to slide to 485K in June from 504K reported in May. Sales of new homes ignite much wider economic activity and this publication has an impact on the markets.
The US dollar was somewhat stronger towards the publication, with EUR/USD sliding from the highs, GBP/USD sitting under 1.70 and USD/JPY edging higher towards 102. The initial reaction was a weaker dollar, but the moves are limited.
Markit’s flash manufacturing PMI for July slightly disappointed with 56.3 points, lower than 57.5 expected. Existing home sales climbed above 5 million (annualized) in a publication from earlier in the week.
Volatility has certainly returned to the markets. Expectations for an earlier than expected rate hike come mostly from the improvement in the US job market. Figures released earlier in the day showed the lowest levels of jobless claims since early 2006.