Take Five: U.S. housing, the BoE and Tokyo's Olympics preparations
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[June 18, 2021] (Reuters)
- 1/ HOME INSPECTION
New home sales and mortgage application
numbers on Wednesday provide a view into U.S. housing -- a standout in
the post COVID-19 recovery that has shown some weakness lately.
U.S. homebuilding rebounded less than expected in May as the high price
of lumber and shortages of other materials hindered builders' ability to
take advantage of an acute shortfall.
The focus on lumber prices is a window into inflationary pressures just
as the Federal Reserve projects a faster timetable for rate rises and
mulls how to end crisis-era bond-buying.
The PHLX housing index of homebuilders and other housing-related stocks
has retreated recently but remains one of this year's outperformers.
- Exorbitant lumber, scarce materials hampering U.S. homebuilding
- Fed signals rate hikes for 2023, start of bond-buying taper talks
Graphic: Housing stock index vs U.S. stock market in 2021:
https://graphics.reuters.com/USA-STOCKS/HOUSING/
xlbpgkxxypq/chart_eikon.jpg
![](http://archives.lincolndailynews.com/2021/Jun/18/images/ads/current/castlemanor_sda_FINANCIAL_2017.png)
2/ PASSING THE BATON
The Bank of England meets on Thursday, and sterling bulls are hoping
chief economist Andy Haldane's last meeting will provide another boost
for the pound.
Haldane has warned of inflationary pressure that might force the BoE to
turn off its monetary stimulus taps. Indeed, May inflation zipped above
its 2% target for the first time in two years.
Analysts expect no changes to policy after the BoE last month said it
would slightly slow the weekly pace of its bond purchases. Britain's
decision to delay the full reopening of its economy by a month may be
seen as a reason for caution.
Some don't rule out a discussion around tapering, however, with other
central banks starting to consider exiting emergency stimulus. Money
markets price in more than 9 bps of BoE rate hikes by May 2022 --
doubling from the start of the week.
- POLL- Bank of England to look through temporary inflation rise
Graphic: GB total assets:
https://fingfx.thomsonreuters.com/
gfx/mkt/xklvyaymjvg/
GB%20total%20assets.JPG
3/ BYSTANDER
It's not just the Bank of Japan on the sidelines of a global debate
about when to exit ultra-easy settings. A polarised and emotional
country is watching as preparations for the Tokyo Olympics, due to start
in a month, heat up.
The coming days should see some easing of emergency lockdown measures
for Tokyo and a few other districts, an acceleration of Japan's slow
vaccination drive and details of the numbers of spectators that will be
allowed into stadiums.
Polls indicate that most Japanese remain wary of the Games even as Prime
Minister Yoshihide Suga, battling sagging ratings and a corporate
scandal, stakes his reputation on them.
Japan's summer blues may help explain why the yen is languishing near
one-year lows around 111-per-dollar.
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![](../images/061821PIX/busine41.jpg)
Real estate signs advertise new homes for sale in multiple new
developments in York County, South Carolina, U.S., February 29,
2020. REUTERS/Lucas Jackson/File Photo
![](http://archives.lincolndailynews.com/2021/Jun/18/images/ads/current/fcs_funeral_lda082613.png)
-Japan health experts warn of Olympics COVID-19 threat, say no spectators the
least risky- Graphic: BOJ balance sheet:
https://fingfx.thomsonreuters.com/
gfx/mkt/dgkvlewkypb/Pasted%20image%201615539011462.png
4/ PMI DIVISIONS
The United States, Australia, Britain and the euro area will kick off global
June flash purchasing managers' index (PMI) readings.
The forward-looking economic indicator should confirm a solid outlook for
manufacturing, but also divergences opening up.
A swift roll-out of COVID-19 vaccines, economies reopening from lockdowns and
hefty stimulus mean PMIs in major economies should remain comfortably above the
50-mark dividing expansion from contraction. The May euro zone composite PMI hit
its highest level since February 2018.
In contrast, India and Brazil have found it hard to contain the coronavirus;
Thailand is grappling with its third and worst wave. This could weigh on
business activity in emerging markets again -- adding to pressure on wealthy
nations to help vaccinate the world and close disparities.
- G7's billion vaccine plan counts some past pledges, limiting impact Graphic:
Composite PMIs: the world at a glance:
https://graphics.reuters.com/GLOBAL-MARKETS/xlbpgajnypq/chart.png
![](http://archives.lincolndailynews.com/2021/Jun/18/images/ads/current/charrons_bch041713.png)
5/ HOT COMMODITIES
Commodity and energy markets have been running red hot, fuelled by a heady mix
of post-pandemic economic recovery, ample global liquidity and speculative
buying.
There's little sign of a let up - or is there?
The world's biggest oil traders predict crude prices will stay above $70 a
barrel and - in a sharp reversal - don't discount a return to $100.
China announced plans to release industrial metals from its national reserves to
curb commodity prices and fight inflationary pressures in what would be the
first such move in a decade by the world's top metals consumer.
In a sign that the road ahead might not be quite so smooth, asset managers
identified being long commodities as the "most crowded" trade in a recent BofA
survey - a status that often precedes an unwinding as markets fear a bubble
bursting.
-Major traders see oil staying above $70/bbl, $100 not impossible Graphic:
Commodities on a tear:
https://fingfx.thomsonreuters.com/
gfx/mkt/rlgvddzyovo/
Commodities%20on%20a%20tear.PNG
(Reporting by Lewis Krauskopf in New York, Vidya Ranganathan in Singapore,
Saikat Chatterjee, Karin Strohecker and Dhara Ranasinghe; Compiled by Dhara
Ranasinghe; Editing by Kevin Liffey)
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