New Home Sales & Market Observations 06/26/06
May New Home Sales +4.6% to 1.234 Million, 3rd straight increase, sales are -5.9% in the last year. New home inventory -0.7% to 556K from a record 560K. Full Report
Last week, a record selloff in the bond market. "During the past five weeks of global sell off and heightened volatility, investors have pulled about $22B from equity funds, or 1% of their total assets,” said the Emerging Portfolio Fund Research (EPFR) group.
“Emerging market equity funds have given up nearly half of the record setting inflows that they have received this year,” said Brad Durham, a managing director of EPFR.
“The question now is how much of the speculative flows running scared from tightening global liquidity conditions, inflation and declining global growth have already been removed and how much of what remains are longer term allocations there to stay, come what may.”
There were equity fund sub groups that have bucked the trend including US small cap funds and the three global sector fund groups: commodities/materials, real estate and utilities. All four are interest rate sensitive.
Watch gold's action between last weeks low $560 and $620, if it closes above $620 that will signal a run on the dollar is underway. The 10 year bond closing above 5.25% will signal much higher interest rates to come.
Speaking of which, yesterday the Turkish bank raised 225 bps to 17.25% as the lira has slid 23% vs the $ since May 1st. The US bond market & dollar has slid 9 days as equities, gold & crude (commodities) have rallied 9 days.
Fed 25 bps bump and bond auctions may signal a switch to cover bonds, thus letting equities slide. Look for a closing breech of NEAR term support at DJIA 11000, SP500 1245, NDX 1550, NAZ 2120 to signal further sliding. We are still toeing that line.
Last week, a record selloff in the bond market. "During the past five weeks of global sell off and heightened volatility, investors have pulled about $22B from equity funds, or 1% of their total assets,” said the Emerging Portfolio Fund Research (EPFR) group.
“Emerging market equity funds have given up nearly half of the record setting inflows that they have received this year,” said Brad Durham, a managing director of EPFR.
“The question now is how much of the speculative flows running scared from tightening global liquidity conditions, inflation and declining global growth have already been removed and how much of what remains are longer term allocations there to stay, come what may.”
There were equity fund sub groups that have bucked the trend including US small cap funds and the three global sector fund groups: commodities/materials, real estate and utilities. All four are interest rate sensitive.
Watch gold's action between last weeks low $560 and $620, if it closes above $620 that will signal a run on the dollar is underway. The 10 year bond closing above 5.25% will signal much higher interest rates to come.
Speaking of which, yesterday the Turkish bank raised 225 bps to 17.25% as the lira has slid 23% vs the $ since May 1st. The US bond market & dollar has slid 9 days as equities, gold & crude (commodities) have rallied 9 days.
Fed 25 bps bump and bond auctions may signal a switch to cover bonds, thus letting equities slide. Look for a closing breech of NEAR term support at DJIA 11000, SP500 1245, NDX 1550, NAZ 2120 to signal further sliding. We are still toeing that line.
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