Elevated mortgage rates took a bite out of existing home sales last month as prospective buyers shook their heads at the sight of a 7 handle. Transactions fell 4.3% month over month (m\/m) and 3.7% year over year (y\/y) to 4.19 million seasonally adjusted annualized units (SAAU). March\u2019s figure was narrowly below projections of 4.2 million SAAU, and it slipped from February\u2019s 4.38 million SAAU. Both the single-family and condominium\/cooperative segments contributed to the decline, with the components dropping 4.3% and 4.9%, respectively, m\/m. Across regions, the West, South and Midwest weighed on results, with m\/m sales down 8.2%, 5.9% and 1.9%. The Northeast offered some strength, however, with an increase of 4.2%. Prospective sellers may be growing impatient with the sluggish pace of sales since 2022, though, with inventory climbing 4.7% m\/m and 14.4% y\/y. Rising listings pushed up the ratio of unsold inventory at the current sales pace to 3.2 months, up from 2.9 in the previous month and 2.7 during the same period last year. Similar to what\u2019s been happening in the new home market, sellers are likely to begin discounting to achieve closings, as the long-awaited move to lower mortgage rates hasn\u2019t materialized.<\/p>\n\n\n\n The Conference Board\u2019s Leading Economic Index returned to contraction territory last month following February\u2019s positive result. The benchmark dropped 0.3% m\/m, missing estimates of a 0.1% fall while slipping from February\u2019s 0.2% rate of expansion. Driving the measure lower were the bear-steepening yield curve, declining plans for residential construction, consumer expectations of future business conditions and demand for goods and services. Meanwhile, rising stock prices, tight credit spreads and a longer hourly work week in the manufacturing sector were some of the positive contributors within the report.<\/p>\n\n\n\n The labor market remains well anchored, with corporates showing little appetite to lay off employees. This morning\u2019s Unemployment Claims report from the US Department of Labor was little changed from the prior week. Initial unemployment claims remained at 212,000 for the week ended April 13, while missing projections of 215,000. Continuing unemployment claims for the week ended April 6 came in at 1.812 million, near the 1.810 million from the previous week and the consensus anticipation of 1.818 million. The longer-term trend didn\u2019t shift much, with the four-week moving average on both initial and continuing components coming in at 214,500 and 1.805 million, unchanged from the previous week for the former and close to the last reading of 1.801 million for the latter.<\/p>\n\n\n\n Realtors\u2019 sale pending signs may be gathering dust, but factories are revving up production with the Philadelphia Fed\u2019s Manufacturing Index climbing sharply this month, a result of activity, demand, shipments and pricing power all strengthening. April\u2019s figure of 15.5 trounced expectations of 1.5 and rose from March\u2019s 3.2 level. However, employment declined as manufacturers attempted to sustain margins amidst loftier wages. Firms remained optimistic about conditions over the next few months, with the future activity sub-index slipping slightly but remaining at elevated levels relative to post-pandemic readings.<\/p>\n\n\n\n Chinese tourism is still benefiting from pent-up demand resulting from Covid-19 pandemic restrictions while in the US, railroad freight volume, broadly speaking, is steady. Elsewhere, artificial intelligence is supporting demand for computer chips. Those are a few points from the following earnings highlights:<\/p>\n\n\n\n Stocks are recovering from their recent battering while taking their cues from better-than-feared developments from the Middle East. Stock bulls are also benefitting from a trading community that got too hedged up, considering oversold technical levels, elevated fears and towering volatility gauges. Bond traders are less optimistic, however, with the fixed-income community gathering their evidence from the hot Philly Fed, low unemployment claims and hawkish Federal Reserve rhetoric. Rate analysts are also looking at a bifurcated commodity market, with oil prices lower on simmering Middle East tensions but copper higher on firmer manufacturing data and undersupplied conditions. For stocks, all major US equity indices are higher while sporting a cyclical tilt, as the Russell 2000, Dow Jones Industrial, S&P 500 and Nasdaq Composite baskets are higher by 1%, 0.6%, 0.5% and 0.3%. Sectoral breadth is positive with all segments higher led by financials, communication services, industrials and materials; they\u2019re up 1%, 1%, 0.6% and 0.6%. In fixed-income land, the 2- and 10-year Treasury maturities are trading at 4.64% and 4.99%, 5 basis points (bps) higher on the session for both durations. The dollar is benefiting from higher rates, strong economic data and a severely weakened Japanese yen that may require central bank stabilization in short order. The greenback\u2019s index is up 15 bps to 106.01 as the US currency gains relative to the euro, pound sterling, franc yen and Aussie dollar. It is dropping versus the Canadian dollar and the yuan, however. WTI crude oil is down 0.2%, or $0.20, to $82.06 per barrel with traders dialing down their geopolitical war premium as it seems likely that another direct confrontation between Tehran and Tel-Aviv won\u2019t occur in the short term. <\/p>\n\n\n\n While lower oil prices could support disinflation in coming months, that effect may be countered by copper, to some extent. Copper prices are up to their highest levels since June 2022, as the global economy\u2019s manufacturing sector poses a sharp recovery. Helping drive the upside are lower interest rates around the world and a demand comeback. Consumers splurged on goods during the pandemic since many services weren\u2019t available, frontloading a lot of the demand that would\u2019ve otherwise been allocated to 2022 and 2023. Today, however, it\u2019s time for many consumers and corporates alike to replace their older products bought during the lockdowns. This effect is especially inflationary since many supply chains have been rerouted and some production stages onshored, as globalization continues to shift towards regionalization. A sharp decline in oil prices may or may not offset the inflationary implications of the manufacturing sector\u2019s powerful comeback.<\/p>\n\n\n\n![\"\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2024\/04\/Picture2-9.png\")
<\/figure>\n\n\n\nLeading Economic Index Weakens<\/strong><\/h2>\n\n\n\n
Worker Demand Continues<\/strong><\/h2>\n\n\n\n
![\"\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2024\/04\/Picture1-20.png\")
<\/figure>\n\n\n\nPhilly Manufacturing Ticks Upward<\/strong><\/h2>\n\n\n\n
Chinese Tourism Rebounds and US Freight Shipping Stabilizes<\/strong><\/h2>\n\n\n\n
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Equities Recover but Bonds Are Cautious<\/strong><\/h2>\n\n\n\n
Oil and Copper Move in Opposite Directions<\/strong><\/h2>\n\n\n\n