US: PMIs and home sales data in the limelight - BBH

Markit reports the flash PMIs for the US today, and the government reports existing home sales which are the key economic releases from today’s session.  

Key Quotes

“New home sales reported earlier this was a bit stronger than expected (1.1% vs. expectations for -0.4%).  Existing homes is a much larger market, of course, and sales are expected to snap back after a shockingly poor report in April (11.4% decline, the largest in two years).  The median forecast from the Bloomberg survey is for a 3.7% rise.  If this is borne out, the annual pace will rise to 590k, which would put it back above its 12-month average.  March saw the cyclical high near 640k, which was the highest since the financial crisis.”

“Three Fed officials speak ahead of the weekend.  Governor Powell, who is very much part of the centrists on the Board.  Bullard has proposed a new paradigm, which sets him a bit apart.  His comments earlier this week suggest a greater desire to begin reducing the balance sheet rather than hiking rates.  Mester from Cleveland is seen more with the Yellen, Fischer, Dudley bloc inclined to gradually hike rates to avoid a more disruptive pace if it slips behind.”

“Yesterday it was announced that all 34 large US banks passed the stress test.  Essentially the test was how this institution would cope with a severe recession.  The results of the second part of the test will be reported next week, where it is determined if the banks have a sufficient cushion to raise dividends and/or buy back shares.  The Trump Administration has proposed changes to the stress tests and their frequency from annually now.”