The Case-Shiller index today showed a further deterioration in the U.S. housing market as price gains slid to a 20-month low. According to tradingeconomics.com, the market fell short of consensus estimates of a 5.8% rise.
Key Takeaways
- The S&P/Case Shiller 20-city index rose a seasonally adjusted .1%
- The index rose 5.5% in August vs. previous year
- This reading was the lowest annual increase in 20 months
What’s Behind the Slowdown?
The issue of rising interest rates has been the topic of much discussion in recent weeks. Rising bond yields have stoked stock market volatility and recent selling that has fueled declines below key moving averages in the indexes.
Dallas Fed President Robert Kaplan was recently quoted in an article by marketwatch.com addressing this issue, stating “We’ve been trying to understand how that weakness fits in with economic growth and one of the conclusions I would come to is…the input costs, labor shortages, higher input costs and yes, higher mortgage rates are all part of the story. I’m not ready yet to say it is an indicator of weakening in the economy, but I can say we’re watching it carefully. It comes in context in my own base case expectation that growth was going to weaken as we head into 2019.”
Ten-Year Notes to Fall Further?
The benchmark ten-year note yield has backtracked a bit recently as stocks saw heavy declines and investors sought the safety of treasuries. That trend is not likely to last long, however, and the selling in treasuries could once again begin to push yields higher. A further rise in rates will almost certainly exacerbate an already-slowing mortgage demand as fixed-rate mortgages track the 10-year yield.
Gold Market Reaction
The gold market is moving slightly lower in early action today. Despite the weak reading on housing prices; stocks are sharply higher in early action as a strong reading on Consumer Confidence is adding to an increasing appetite for risk today. The Dow Jones Industrial Average is currently gaining over 200 points while gold is down $4.00 per ounce at $1224.60.
Gold Price Chart
More articles from Matthew Bolden
