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Case-Shiller Home Prices & Trade Deficit Dip Slightly

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Tuesday, June 28, 2022

The S&P Case-Shiller Home Price Index for the month of April is out this morning, and even though this report looks a bit deeper into the rearview mirror, we still see signs of home prices slackening — if only a bit. The Case-Shiller headline of +20.4% growth in home prices year over year is down 20 basis points (bps) from the March headline, with only 9 of 20 cities showing prices rising faster month over month.

Led once again by warm-weather cities Tampa (+35.8%), Miami (+33.3%) and Phoenix (+31.3%) — three extraordinarily high-growth home-price cities, even with a slightly lower overall headline — this index continues to demonstrate clearly that home prices are essentially relative to the region of the country you’re in.

The three lowest-growing cities year over year continue to be Minneapolis, Washington DC and Chicago, although all three are still up double-digits from year-ago levels. Again, we’re looking at prices for April, when the Fed funds rate — which has since proven directly influential on mortgage rates — was still 25-50 bps. We might expect, based on more recent housing data we’ve already seen, that this trajectory may continue downward in coming reports.

Advance Trade in Goods for May reported a less-deep print month over month: -$104.3 billion, while still a deep cut of a trade deficit, is better than the previous month’s more deeply revised -$106.7 billion. The May headline is the lowest we’ve seen so far in 2022. Imports marked a -0.1% for the month, while Exports improved +1.2%. Though it’s still early, we look to be retreating from the all-time trough in March of -$125.9 billion.

After today’s open this morning, we’ll get a look at new Consumer Confidence numbers for June. Analysts expect a headline number of 100.0 even, down a bit from the 106.4 posted for May. This would be the lowest level we’ll have seen since the first half of 2021.

Over its history, going back to February 1967, despite notable volatility every decade or so, 100 is roughly a median line for Consumer Confidence. We saw the peak north of 140 back in the late 90’s, while its nadir came during the impact of the Great Recession roughly a decade later.

Ahead of the opening bell, the Dow is +140 points, the S&P 500 is +15 and the Nasdaq +30 points. All major indices are still fighting to climb back from what appears to have been a bottoming-out a couple weeks ago, when the Fed rose interest rates another 75 bps and investors started hitting the panic button that a “hard landing” was inevitable. Such an assertion remains in doubt as of now.

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