US data preview

Analysts at Nomura offered a preview of the forthcoming and final US data of the week.

Key Quotes:

"New home sales:

New home sales decelerated notably in December, registering an annualized rate of 536k, which is a 10.4% m-o-m decrease. In January, we expect new home sales to have rebounded. Mortgage applications for home purchases were up modestly in January. The sales of single family homes index in the National Association of Home Builders (NAHB) housing survey inched downward in January, but remained at an elevated level. Yet, the NAHB reported that industry headwinds such as labor shortages and supply-side constraints still persist. In addition, a sharp decline in new home sales in December warrants some positive payback in this volatile series in January. Therefore, we forecast an 8.2% m-o-m increase to an annualized rate of 580k (Consensus: +6.3% to an annualized rate of 570k).

University of Michigan consumer sentiment:

The preliminary February estimate of consumer sentiment from the University of Michigan survey fell slightly from 98.5 to 95.7. The decline was largely due to a modest drop in consumer expectations for the future rather than the assessment of current conditions. The sharp partisan divergence in sentiment seen after the election widened again in this issue. Given the starkly partisan response to the election, the asymmetry in consumer responses raises questions about the degree to which the post-election bounce in consumer sentiment will translate into stronger spending. In the final estimate for February, we hope to learn some additional color on the development of consumer sentiment. Consensus expects a steady reading of 96.0 for the final estimate of this consumer sentiment index for February. As for inflation expectations, the median of consumers’ 5- to 10-year inflation expectations has remained relatively steady despite some monthly volatility. The FOMC tends to look through monthly fluctuations. We will keep an eye out for any sustained deviation from the current trend in upcoming reports."

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