Today’s price action was very typical of a Monday during the Mid-Summer; mostly range-bound outside of any major news announcements. Traders took the +23.6% headline U.S. June New Home Sales Number (MoM) and ran. EUR/USD rallied from 1.2940 to test the psychological 1.3000 level, EUR/JPY went from 112.70 to a high of 113.30, 10yr Treasury Yields moved from 2.99% to 3.03% and Gold traded nearly $10 lower ($1189 to $1180) on the back of this news. By the end of the day the S&P500 finished 1.12% higher and interestingly, the USD fell the most percent versus the NZD and AUD (commodity currencies), even though Gold finished the day .54% lower.
Typically, a 23.6% surge in New Home Sales from the prior month would be great news, but the “upbeat” 330K number that came out earlier today is far from what it seems. The predominant reason for this surge was due to a negative revision in the May number, down to 267K from 300K (-11% revision). Additionally, March and April’s data were also revised lower (384K to 389K and 446K to 442K respectively). In summation, the total net revision was down 62K and when subtracted from the 330K print in June (to find the Total New Home Sales) we get 268K, which was actually below the 311K estimate. Therefore, these revisions leave us largely uninspired, suggesting the homebuyer tax credit did not stimulate the sales of new homes - as much as was implied by the data in prior months - and reaffirms our beliefs that the housing market will remain weak over the coming quarters.
On the data front tonight there is Japan June Corporate Services Price Index and Australia May Conference Board Leading Index.