New Home Sales in January Decline, Global Markets, Interest Rate Hikes this year?
February 24, 2016
Wednesday – February 24
The Commerce Department reports that New Home Sales in January declined 9.2% from December to an annual rate of 494,000 units versus the 523,000 expected. December’s rate of 544,000 had been the highest rate since the 545,000 in February of last year. Sales in the West were hit the hardest, declining a whopping 32% to a rate of 110,000, the lowest since July 2014. Rounding out the country, despite a big blizzard in the Northeast last month, sales were up 3.4%, while the Midwest fell nearly 6% and the South saw sales up 1.8%.
Global Bond markets are turning their attention to the risk of the U.K. leaving the European Union. The implications of a “Brexit” for the global economy may not be huge, but it just adds to the other negative geopolitical events. The news is weighing on the U.S. Stock markets. The closely watched S&P 500 is down 6% so far in 2016 as lower oil prices have also weighed on the equity markets along with the geopolitical events.
The controversy surrounding any interest rate hikes this year by the U.S. Federal Reserve became a bit more clouded this morning. Richmond Fed President Jeffrey Lacker said that the ongoing strength in the job markets could give justification for multiple interest rate hikes this year. Mr. Lacker’s views contrast to the Federal Funds Futures markets, which are not pricing in any interest rate hikes this year. The Fed Funds Rate is the benchmark interest rate, which is a short-term instrument that is controlled by the central bank.
