Consumer sentiment and the US secondary home sales market are rebounding better than expected – another economic surprise from the world’s largest economy.
The Consumer Confidence Index for December added 9.7 points to 110.7 – stronger than the 104.6 expected. The improved indicator suggests a greater willingnes to spend, which is generally considered good news for the stock market.
In addition, secondary home sales rose 0.8% in November after five months of contraction as mortgage interest rates retreated from record levels following long-term government bond yields. It would be too reckless to view the current rise in sales as a reversal, as median prices declined for the sixth consecutive month. In addition, it should be remembered that sales have only been below current levels for four months, during the worst of the mortgage crisis.
The weakness of the housing market may be a factor in favour of the Fed easing its policy, which may temporarily support the bullish mood in the US equity indices, where the Nasdaq100 and Dow Jones 30 are updating historical highs almost daily.
Information supplied by: The FxPro Analyst Team
