Market 06/26: New home sales unexpectedly drop sharply

New home sales hit lowest level since November 2023

• May new home sales decline -11.3% M/M (expected: -0.2%; previous month: +2%) down to 619,000 units - lowest in 6 months.

• This decline was partly affected by a sharp upward revision in April new home sales - largest revision since July 2019.

• Supply of available homes increases 481,000 - highest level since 2008.

• Excess supply and weak sales cause median home price to decline -0.9% Y/Y down to 417,400 USD

• Number of new homes under construction declines -5.5% Y/Y down to 1.28 million units - lowest since June 2020

• Building permits -3.8% Y/Y down to 1.39 million - lowest in 4 years

Real estate companies account for an increasingly low weight in the S&P 500 index.

70 billion USD 5Y T-Bond auction favorable as demand picks up again

• High Yield: 4.331% (market yield: 4.335% | previous session: 4.553%)

  => Stop-through: 0.4 bps

  • Successful bid ratio at High Yield: 5.63% (previous session: 96.34%)

• Bid-to-Cover: 2.35 (previous session: 2.3)

• Competitive award components:

  • Dealers: 13.38% (previous session: 19.52%)

  • Indirect bidders: 68.92% (previous session 65.04%)

Fed official Lisa Cook: Unclear on timing of rate cuts

• Progress of interest rate cuts depends on economic data developments

• Inflation slows, labor market cools

• Expected inflation to flatten in second half of year, drop more sharply in 2025

WTI oil price falls, government adds large volume of oil to SPR

API Report:

• Crude oil stocks +914,000 barrels (expected -200,000)

• Cushing -350,000 barrels

• Gasoline +3.84 million barrels (expected -900,000 barrels) - largest increase since Jan 2024

• Distillate products -1.18 million barrels

DOE Report

• Crude oil stocks +3.59 million barrels (expected -200,000)

• Cushing -226,000 barrels

• Gasoline +2.65 million barrels - largest increase since Jan 2024

• Distillate products -377,000 barrels

Government added 1.285 million barrels of oil to SPR last week - largest increase since June 2020.

US crude oil production unchanged, near record high — southern rig count adjusted lower

China: 10-year government bond yield at record low since 2002, growth concerns

10Y T-bond yield drops to 2.22% - lowest since 2002 amid fading economic growth momentum

China's 2024 growth forecast raised:

• Exports expected to +4.3% Y/Y, > 2.8% level in May

• GDP expected to grow 5%, > 4.9% estimate from May

China reveals: ~28 billion RMB (3.9 billion USD) in government funds misused by officials in 2023

Crypto Market: Ethereum ETF approval process proceeding smoothly

SEC Chairman Gensler: Ethereum ETF approval process proceeding smoothly, silent on potential ETF launch timeline

Q4 FY24 earnings update: FedEx, General Mills

1. FedEx

• Revenue: 22.1 billion USD, up from 21.9 billion USD last year

• Operating income: 1.56 billion USD

  • FedEx Express: 201 million USD

  • FedEx Ground: 1.1 billion USD

• Net income: 1.47 billion USD

• Diluted EPS: 5.94 USD

2. General Mills

• Revenue: 4.7 billion USD, -6% Y/Y

  • North America Retail: 2.85 billion USD, -7% Y/Y

  • North America Foodservice: 589 million USD, +4% Y/Y

  • International segment: 668 million USD, -10% Y/Y

• Diluted EPS: 0.98 USD, -5% Y/Y

Other news: USD/JPY hits 160

1. Japanese Yen falls to decade record low as USD/JPY hits 160

• Bloomberg Dollar Index hits highest level since November last year

2. Martin Schlegel appointed as new chairman of SNB