As investors eagerly anticipate key data releases this week, U.S. Treasury yields experienced a slight dip. The focus is on the second-quarter GDP figures and June’s personal consumption expenditures price index, which is the Fed’s preferred inflation gauge. These reports will play a crucial role in shaping potential monetary policy decisions at the upcoming Fed meeting.
In June, existing home sales dropped by 5.4% compared to May, resulting in 3.89 million units on a seasonally adjusted, annualized basis. This decline is attributed to mortgage rates surpassing 7% in April and May. Despite the slowdown in sales, the median price of existing homes sold reached an all-time high of $426,900, reflecting a 4.1% year-over-year increase. The housing inventory also saw a significant rise of 23.4% from last year, bringing the supply to 1.32 million units, equivalent to a 4.1-month supply.
The increase in housing inventory, along with prolonged listing times, indicates a gradual transition from a seller’s market to a buyer’s market. However, the supply remains below the balanced 6-month level. In the currency market, the euro and sterling both weakened by 0.02% against the dollar, while the dollar depreciated by 0.14% against the yen. Despite the strong dollar, gold continued to exhibit resilience.
The short-term outlook for the dollar appears positive, supported by technical factors and market positioning ahead of crucial economic data releases and the Fed meeting. Nonetheless, traders must exercise caution as U.S. political developments and evolving economic indicators could introduce volatility in the market in the upcoming weeks. If housing inventory continues to rise, it may lead to further shifts in the housing market, potentially impacting sales volume or putting downward pressure on prices.