Home > XE Currency Blog > International Week in Review; US Housing Market Continues to Stall Edition


XE Currency Blog

Topics7698 Posts7743
By HaleStewart July 26, 2014 8:20 am
  • XE Contributor
HaleStewart's picture
HaleStewart Posts: 792
International Week in Review; US Housing Market Continues to Stall Edition

     US news was a bit disappointing, largely because of weak housing numbers.  New home sales decreased 8.1%.  While it should be noted the previous month saw an increase of 8.3% (meaning the latest number could be seen simply as a “cooling off” from a strong month), a drop this large is concerning.  In addition, existing home sales only increased 2.1%.  As these two charts from the blog Calculated Risk show, the new home market has stalled at low levels and the existing home market is still weak:

Inflation printed at 2.1% Y/Y, which is just slightly above the Fed’s target.  And durable goods came in at a .7% M/M increase.  As this graph shows, durable goods have been fluctuating in a range for the last year:

     The main news out of Canada was a continued increase in retail sales at .7% M/M:

     The EU continues to limp along.  The Markit composite number is still printing in positive territory:

And the manufacturing and service numbers are still positive (51.9 and 54.4, respectfully).  Unfortunately, France is still reading below 50, meaning the second largest EU economy is still just barely growing.  Finally, the private loan market is still in terrible shape, with total loans decreased 1.7% Y/Y.

     Japan’s news was also mixed.  On the positive side, the PMI manufacturingnumber came in at 50.8, indicating the post-sales tax increase environment may be improving. 


But while CPI increased 3.6% Y/Y, it actually decreased .1% M/M, indicating the overall price increases may be slowing.

And then there are exports, which decreased 2% Y/Y.

     And finally we have the UK, where the strongest news was that GDP had finally topped the previous high established before the recession.  However, as this chart shows, the move higher has been driven mostly by services; other areas of the economy (most notably production) are still lagging:

Disappointing news came from retail sales, which only increased .1% M/M.

     The most important news this week came from the UK's GDP report, as the economy is finally increasing after the recession.  The EU is still in terrible shape, save for Germany.  The US housing market news is concerning; this is one area of the economy that had been very positive.  Now, it appears to be a non-contributing factor.  Abenomics may be hitting a speed bump, as the inflation rate appears to be stalling. 

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer 



Paste link in email or IM