United States: Higher mortgage rates burn the housing market

Summary

United States: Higher mortgage rates burn the housing market

• The recent run-up in mortgage rates is nudging the housing market back toward recession. Existing home sales in September sank to their slowest pace since 2010. Single-family building has been more resilient; however, builders are growing less confident in their ability to sustain sales.

• Next week: New Home Sales (Wed.), Real GDP Growth (Thu.), Personal Income & Spending (Fri.)

International: China's economy outperforms in Q3

• The challenges facing China's economy are abundant; however, China's economy was able to record solid growth in Q3. Incorporating Q3 data into China's growth prospects for this year leads us to believe China's economy could reach authorities' official growth target of 5%. With that said, China's fundamental and structural problems have not disappeared with just one quarter of solid growth.

• Next week: Bank of Canada (Wed.), European Central Bank (Thu.), Chilean Central Bank (Thu.)

Interest rate watch: Impact of Middle East developments on rates and inflation

• Many financial market participants are looking over their shoulders wondering what could be the next catalyst to drive rates higher. What might we see in the rates market, given the conflict in the Middle East and potential inflation drivers from higher commodity prices and overall wartime expenditure from the federal government?

Topic of the week: A surge in household net worth and progress in bridging the wealth gap

• This week, the Federal Reserve released its 2022 Survey of Consumer Finances (SCF) encompassing the time period between 2019 and 2022. The triennial report provides a comprehensive snapshot of the financial circumstances of households as it pertains to income, net worth, asset ownership and credit usage.

Download The Full Special Commentary