US data previewed: start of a busy week - Nomura
|Analysts at Nomura offered a preview of the start of this week's busy US data schedule.
Key Quotes:
"Case-Shiller home price index: The Case-Shiller 20-city home price index was up 5.73% y-o-y in January, accelerating somewhat from the average pace in 2016. The recent acceleration may have been in part driven by a lean supply of available housing units and steady demand for housing. A sharp pick-up in mortgage rates after the election may have also contributed to higher home prices, because of the last-minute rush to purchase homes prior to further increases in mortgage rates. Consumer fundamentals have been favourable for housing demand, with a steady pace of job creation and income growth. Further, National Association of Home Builders surveys suggests that the traffic of prospective buyers remained elevated in March and April. But increasing home prices may hurt home affordability and price out potential home buyers in the long run. Consensus expects an increase of 5.78% y-o-y for February.
New home sales: Incoming data suggest some moderation in new home sales in March following two previous months of outsized gains, partly boosted by unusually warm weather. Although surveys by the National Association of Home Builders suggest that traffic of prospective buyers remained healthy in recent months, we think the negative impact from mean reversion will outweigh healthy demand for housing. Thus, we forecast a 3.0% m-o-m decrease to an annualized rate of 574k (Consensus: -1.5% to an annualized 583k). Yet, as new home sales tend to be volatile on a monthly basis, we caution against reading too much into a single reading. We expect modest increases in employment and wages to continue in the medium term, and these factors would support consumer demand for new homes.
Conference Board’s Consumer Confidence: Conference Board’s index rose further to 125.6, the highest since December 2000. Assessments of both current and future conditions improved strongly to historical highs. The pace of job creation and income gains remained steady, coupled with the unemployment rate inching down for the past three months. However, the University of Michigan survey noted in recent prints that political partisanship in consumer sentiment continued into April, with self-identified Democrats expecting a recession and self-identified Republicans expecting an economic boom. Considering this sharp contrast, it is possible that continued policy uncertainty may still affect consumer sentiment in the coming months. Therefore, we expect this index to plateau at 126.0 in April (Consensus: 122.5), up slightly from the March reading."
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