US new home sales fell in February

New home sales in the US fell in February, for the first time in three months. On a month-on-month basis sales of newly built homes fell 0.3%, after rising by an upwardly revised 1.7% in January. The February print was significantly lower than consensus expectations of 2.3% m/m growth. Nonetheless demand for new homes is expected to improve once more in coming months, particularly in the face of falling mortgage rates. A healthy supply of new build properties coming to market is however putting downward pressure on prices, with the median price for new build properties falling 7.6% y/y in February.

The Federal Reserve Bank of Chicago’s index of National economic activity, which draws on 85 different economic data series, rose to 0.05 in February from -0.54 in January. Values above zero are consistent with the US economy growing above-trend.

After a quiet start to the week, in terms of economic data releases, markets are likely to start anticipating the February print of core PCE inflation data due for release at the end of the week. Consensus expectations are for the Fed’s preferred measure of inflation to reach 0.3% m/m from 0.4% m/m in January. On an annual basis that would leave core PCE inflation at 2.8% y/y in February, unchanged from January.

Today’s Economic Data and Events

• 16:30 US Durable goods orders (Feb) forecast: 1.2% m/m
• 18:30 US Conference board consumer confidence (Mar) forecast: 106.8

Fixed Income

• US treasury yields rose on Monday, with the 2yr yield gaining 4bps to 4.6254%, and the 10y yield rising by 5bps to 4.2454%. Markets will be anticipating key data releases towards the end of the week, most importantly US personal spending, income and the core PCE deflator print for February.
• There were also widespread increases in yields amongst major European bonds on Monday. The 10yr Bund rose by 5bps to 2.371% and the 10yr Gilt yield gained 6bps to 3.9869%.

FX

• The dollar fell against a basket of major peers on Monday, with the spot index falling 0.2%. EURUSD gained 0.27% to 1.0837 and GBPUSD rose 0.28% to reach 1.2636.
• The dollar was also weaker against commodity currencies on the day. AUDUSD gained 0.38% to 0.654, NZDUSD rose 0.18% to 0.6003 and USDCAD fell 0.13% to reach 1.3586.

Equities

• US equities indices fell on Monday, with losses driven by industrials and technology stocks. The Dow Jones declined 0.41%, the S&P 500 fell 0.31% and the NASDAQ dropped 0.27% on the day. Stocks such as Apple and Alphabet were hit by the opening of an EU investigation into firms’ compliance with the bloc’s Digital Markets Act, a set of laws designed to curtail the power of big tech firms.
• European equity market moves were mixed again on Monday. The Euro Stoxx 50 and the DAX rose 0.26% and 0.3%, respectively; while the CAC 40 was flat and the FTSE 100 fell 0.17%.
• Locally, there were muted gains in both the DFM (up 0.03%) and the ADX (up 0.04%).

Commodities

• Oil prices rose for the first time in three days on Monday, on the back of escalating geo-political developments over the weekend. Brent futures rose 1.55% to USD 86.75/b., while WTI gained 1.64% to USD 81.95/b.