Chapter 14 October 24th Financial News
[Quick Facts]
1. U.S. rent prices fall for the fifth straight month.
2. U.S. home sales data challenge market and consumer confidence.
3. Rising BOJ policy move bets shift the focus to neutral rate.
4. The EU considers gas price cap extension to avert a winter gas crisis.
5. Lebanon and Israel exchange fire along the temporary border.
[News Details]
U.S. rent prices fall for the fifth straight month
Realtor.com's September rental report shows that the U.S. housing market balance continues to tip in favor of renters amid an uptick in construction rates of multifamily homes, which helped push down rents for the studio to 2-bedroom properties for the fifth consecutive month. Faster absorption rates of newly constructed apartments within the first three months after completion are signaling strong renter demand, particularly for lower-priced units. In September, median asking rents in the 50 largest metros dropped to $1,747, down $29 from the peak seen in July 2022. Rent prices, while still significantly higher than pre-pandemic levels, dipped on an annual basis for units of all sizes. While a near-record-high number of new apartment units coming into the market is helping drive down rent prices, these units are being absorbed swiftly by renters, signaling robust demand.
U.S. home sales data challenge market and consumer confidence
The U.S. housing market is worrying as it faces a number of challenges. Its existing home sales are at their lowest level in 27 years, mortgage rates have soared, and mortgage applications have fallen to their lowest level in 26 years. The declining sales and persistently high prices are worrisome. Home-builder stocks have suffered setbacks, though not as overheated as in the past. The market has no solutions to these challenges. We don't know what the impact will be on consumer confidence.
Rising BOJ policy move bets shift the focus to neutral rate
As traders bet that the Bank of Japan (BOJ) will end its negative interest rate policy early next year, their focus is shifting to policymakers' views about the neutral interest rate, which could be in a wide range of 0.5%-2%. Given that the neutral rate will guide the BOJ's monetary policy normalization, it will also provide a key reference for the market pricing of Japanese bond yields, which will affect investments in U.S. Treasury securities and European as well as Australian bonds. Japan's overnight index swap curve showed a 20% chance of the BOJ ending negative interest rates by the end of the year, with as much as a 100% chance of an exit by April.
The EU considers gas price cap extension to avert the winter gas crisis
Despite falling gas prices and record-high EU gas reserves, this winter's gas supply could still be affected by the Israeli-Palestinian conflict, as well as potential vandalism of gas infrastructure. Based on this, the EU is considering extending the emergency gas price cap introduced in February this year.
The measure indicates that the cap will come into effect if the Dutch TTF, Europe's gas price benchmark, reaches €180 per megawatt hour for three consecutive days and the TTF price is more than €35 above the global liquefied natural gas (LNG) price during those three days.
Lebanon and Israel exchange fire along the temporary border
From Oct. 22 to the early morning of 23 local time, Lebanese Hezbollah forces and the Israel Defense Forces (IDF) continued to exchange fire along the temporary border between Lebanon and Israel. The Israeli military said it struck two Lebanese Hezbollah targets in the early hours of Oct. 23. Lebanese media reported that there were Israeli air strikes in southern Lebanon. According to a news release from the Israeli army, on the 23rd, Israeli airstrikes hit a target in Lebanon which planned to fire anti-tank missiles and rockets at Israel.
[Focus of the Day]
UTC+8 14:00 U.K. ILO Three-Month Unemployment Rate (Aug)
UTC+8 16:00 Reserve Bank of Australia Chairman Bullock attends the Global Markets Conference hosted by the Commonwealth Bank of Australia
UTC+8 16:30 U.K. Markit Service PMI Prelim (Oct)
