Market Wrap

2022年6月24日

The SPX (+3.4%) opened higher on Friday and quickly gained momentum before trading in a narrow range until the session and then jumped over 3900 points.

Investors rejoiced over today’s economic data as it signaled that inflation could be peaking (average house prices declined MoM and inflation expectations declined on a 5-10 year horizon declined from 3.3 to 3.1 percent according to a report from the University of Michigan.

Buying interest was driven mainly by mega-cap growth stocks (+3.7%), while value (+2.7%) was lagging relatively speaking.

Digging a little deeper, transport stocks helped the industrials sector to gain 3.5 percent, driven by FedEx (+7.2%), which rallied past its 200-day moving average and airlines also outperformed today with American Airlines closing 7.1 percent higher.

The energy sector continued its underperformance, but was still able to gain 1.5 percent, boosted by oil, which climbed 3.3 percent higher.

Over at the bond market 10-yr note yield rose six basis points to 3.13 percent while the 2-yr yield rose five basis points to 3.06 percent

Economic data US

New home sales increased 10.7 percent MoM in May to 696K units (above the consensus of 595K) from an upwardly revised 629K in April, but on a YoY basis, new home sales decline 5.9 percent. The big gain in May coincided with some slippage in mortgage rates and was likely spurred by a rush of buying interest in anticipation of mortgage rates moving up again.

• The median sales price increased 15.0 percent YoY to 449K dollar while the average sales price jumped 14.8 percent to 511K, but tumbled MoM to the lowest since January (key point).
  
• New home sales MoM and YoY by region: Northeast (-51.1%/-41.5%), Midwest (-18.3%/-37.0%), South (+12.8%/+1.5%) and West (+39.3%/+0.5%).
  
• At the current sales pace, the supply of new homes for sale stood at 7.7 months, versus 8.3 months in April and 5.4 months in May 2021. A six-month supply is typically associated with a more balanced market.
  

The Consumer Sentiment report of the University of Michigan was a disaster meanwhile. We quote Surveys of Consumers Director Joanne Hsu:

“The final June reading confirmed the early-June decline in consumer sentiment, settling 0.2 Index points below the preliminary reading and 14.4% below May for the lowest reading on record.

Consumers across income, age, education, geographic region, political affiliation, stockholding and homeownership status all posted large declines. About 79% of consumers expected bad times in the year ahead for business conditions, the highest since 2009.
Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession.

Since the preliminary reading, the Federal Reserve raised interest rates by 75 basis points, exceeding the 50 basis point hike that had been previously telegraphed. The final June reading of the median expected year-ahead inflation rate was 5.3%, little changed from mid-month or the preceding four months.

In contrast, long run expectations receded from its mid-month reading of 3.3% and settled at 3.1%, back within the 2.9-3.1% range seen in the past 10 months. Consumers also expressed the highest level of uncertainty over long-run inflation since 1991, continuing a sharp increase that began in 2021.”