Month: February 2014

Worries about US inflation being too low are very 2013. US January CPI edged up to 1.6%YoY from 1.5% in the previous month. Energy was the main contributor, with electricity, gas and fuel oil rising sharply. Core inflation, excluding food and energy, actually decreased 0.1%-point to 1.6%YoY. Rents were the main driver of core inflation this month, rising 0.3%MoM. And there probably is more to come later this year. Rents follow house prices developments with about a 1.5 year lag, as rising house prices slowly push people towards rental homes. The lag means that most of the 10+% house price increase of 2013 has yet to feed through in rents. Shelter contributed 0.7%-point to inflation in 2013, but this could rise above 1%-point later this year. This will not push inflation into Fed panic territory anytime soon, but rents are a component to watch nonetheless this year.

US housing starts fell 16%MoM in Januari to 880k (saar), well below consensus. Although the previous two months always looked inflated, this is a rather steep correction. The generally less volatile single-family component of housing starts also fell back -16%MoM, and now is 6.7% lower than a year ago. The bad weather is widely blamed for downside surprises from the US lately; is that the case here as well?

The answer is probably at least partly yes. Issuance of single-family building permits fell a much more benign -1.3%MoM. Permit issuance is still slightly higher than a year ago. That is encouraging: builders have not yet seen reason to ask for far fewer permits. The sharp drop in homebuilder sentiment, published by the NAHB yesterday, was also largely driven by fewer sales and less traffic of prospective buyers. Both could be attributed to bad weather.

But bad weather cannot be all of the answer. Homebuilders have also become less optimistic about prospects forin the coming six months. Moreover, mortgage applications for house purchases, published by the MBA earlier today, show a further decline. Applications are hovering some 15% below levels a year ago. It seems that higher mortgage rates, induced by the Fed’s tapering, are also taking their toll on the housing market. We will get a clearer picture of the true state of the housing market once the snow has melted.

In het ING-weekoverzicht: Beleggers zetten deze week hun roze bril weer op, ondanks dat Amerikaanse macrocijfers het even laten afweten. Europese cijfers waren beter. Maar zoals één Valentijnskaartje niet voldoende is om de liefde te bestendigen, zo is gematigde groei niet voldoende om het Europese economisch herstel zeker te stellen.

Lees hier verder.