- Market holidays pave way for quiet few days
- US House Price growth and transactions set to remain upbeat
- Will UK House Prices see slowdown as stamp duty holiday ends?
Understandably with a series of public holidays across the globe, it’s set to be a quiet few days for economic releases. However, the US Case-Shiller Home Price Index data for October will be published on Tuesday and whilst this is admittedly aged data, any signs of a deceleration here are likely to offer some welcome relief to policymakers. The Federal Reserve has already braced markets for a hawkish turn in the New Year but with annualised growth in September having exceeded 19% – that’s admittedly slightly below July’s print of 20% – the pace clearly isn’t sustainable, especially with wage growth remaining sluggish. Forecasts indicate a modest slowing down to around 18.5%.
Keeping with US real estate, Wednesday sees the publication of Pending Home Sales for November. This is set to be the sixth consecutive month of contraction for the metric, although comes off the back of some bumper numbers posted earlier in the year. Whilst that looks like a degree of normalisation in play, it’s worth bearing in mind that average price growth has been positive throughout the pandemic period so the earlier spike wasn’t driven by a prevalence of ‘fire sales’. The risk here would be if the anticipated annualised reduction of around 6% or so fails to materialise, suggesting the Fed have an even bigger challenge on their hands in terms of moderating consumption in the 2022.
Closer to home, Thursday sees the release of the latest Nationwide House Price data for December. This number will be under scrutiny to better understand the run-out of that end to the stamp duty holiday a few months ago, although another modest month-on-month increase of around 0.7% is being called. With the Bank of England having already started its campaign of policy tightening and being expected to deliver more rate hikes in the New Year, the big risk here would however be a sudden and unexpected drop in prices.
Back across the pond and Thursday also sees the release of the Chicago PMI print for December. This is arguably quite niche data but typically acts as a curtain raiser on the nation-wide ISM PMI data, and it’s set to be a quiet week! Expectations are that the reading will be little changed from the 61.8 posted in November and as such shouldn’t offer much of a distraction to those traders who are at their desks – it’s well above the break even 50 and offers no suggestion that the Fed’s hawkish pivot may be looking too aggressive.
Rounding off the week – and indeed the year – is Friday’s publication of the Chinese National Bureau of Statistics PMI data for December. With inflation seemingly under control, these numbers are set to be rather more measured than the insight from Chicago. The key point to watch for will be ensuring the reading remains above the break-even 50 mark, as the latter part of the year has been blighted by challenges here, both with supply chain disruption and rising energy costs. Forecasts indicate a reading of around 50.5 will emerge, which ought to placate any major concerns although leaves little room for manoeuvre should downside pressures resume.
Article by Tony Cross
of Monk Communications