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Friday's data: The good, the bad & the ugly



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All three major U.S. stock indexes slightly red

Financials weakest S&P 500 sector; Comm Svcs leads gainers

Euro STOXX 600 index down ~0.7%

Dollar up; crude barely red; gold off >1% bitcoin both off >2%

U.S. 10-Year Treasury yield rises to ~4.27%

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com



FRIDAY'S DATA: THE GOOD, THE BAD & THE UGLY

Three divergent economic indicators released on Friday call to mind a certain Sergio Leone western.

So, in and order dictated by its title:

THE GOOD

S&P Global released its advance "flash" current-month purchasing managers' indexes (PMI) for the manufacturing and services sectors.

On the manufacturing side USMPMP=ECI, factory activity unexpectedly gathered a bit of momentum, gaining 0.4 points to 51.7 and beating the 51.0 consensus.

As for services USMPSP=ECI, that number also defied expectations by climbing from 54.8 to 55.1, the series' most robust reading since April 2022.

The composite reading crept 0.1 point higher, to 54.6.

A PMI reading above 50 indicates monthly expansion.

"The further slight increase in the composite PMI this month leaves it a touch above the two-year high reached in May and provides some reassurance that growth is holding up reasonably well for now," writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

"But the combined picture still looks weak, and growing pressure on companies from high interest rates, tight credit and slowing consumer demand means that we remain confident employment growth will show much clearer signs of slowing soon," Allen adds.

THE BAD

The sales of pre-owned U.S. homes USEHS=ECI dipped by 0.7% last month to 4.11 million units at a seasonally adjusted annualized rate, landing just a hair above the expected 4.10 million units SAAR, according to the National Association of Realtors (NAR).

The decline was appreciably shallower than April's 1.9% drop.

The report marked the third consecutive monthly decline as record high home prices put a damper on affordability, while 30-year fixed mortgage rates continued to cruise along at an altitude north of 7%.

That last bit has helped keep buyers and sellers alike out of the market, which has, in turn, depleted the inventory of houses on the market.

"Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers," says Lawrence Yun, NAR's Chief Economist. "The mortgage payment for a typical home today is more than double that of homes purchased before 2020.

Glass-half-full folks will note that after three months of declining sales, inventories have recovered a tad. At May's rate of sales, it would take 3.7 months to sell every home on the market, up from 3.5 months in April.

"Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months," Yun adds.

THE UGLY

Finally, the Conference Board's (CB) Leading Economic Index (LEI) USLEAD=ECI inched down 0.5% in May, an improvement over April's 0.6% decline but deeper than the 0.3% dip economists projected.

The index, which aggregates 10 forward-looking metrics (including PMI new orders, building permits, Treasury yield spreads, S&P 500 price performance, among others), has been on the decline since March 2022.

This time, the drop was "driven primarily by a decline in new orders, weak consumer sentiment about future business conditions, and lower building permits," says Justyna Zabinska-La Monica, CB's senior manager of Business Cycle Indicators.

"The leading index continues to point to a recession, though the pace of declines have slowed this year," writes Matthew Martin, U.S. economist at Oxford Economics. "We continue to view the signal as overly pessimistic."

"On balance, we see a gradual downshift in the economy's expansion rather than a collapse," Martin adds.

There's that, at least.

The graphic below charts the LEI against one of its components, the S&P 500. The two seemed to move in tandem until around October 2022, when they parted ways:

(Stephen Culp)

*****



FRIDAY'S EARLIER LIVE MARKETS POSTS:


NASDAQ, S&P 500 WILT A LITTLE IN THE HEAT - CLICK HERE


CRUDE FUTURES WELL UP IN JUNE, BUT ENERGY SECTOR STILL IN THE GROUND - CLICK HERE


NO FRIDAY FEELING FOR EURO ZONE BANK STOCKS - CLICK HERE


BROKERAGES STICK TO AUGUST RATE CUT AFTER BOE'S 'DOVISH' JUNE MEETING - CLICK HERE


WEEKEND WORRIES - CLICK HERE


WHAT'S BETTER THAN A 'TRIPLE WITCHING'? A QUAD WITCHING! - CLICK HERE


GOLDILOCKS WORRIED ABOUT THREE BEARS, NOT FRANCE - CLICK HERE


IN THE 2024 U.S. ELECTION, THE KIDS ARE ALRIGHT - CLICK HERE


BANKS DRAG WHILE HEALTHCARE, DRINKS PROVIDE LIFT - CLICK HERE


EUROPEAN FUTURES SIGNAL TEPID OPEN - CLICK HERE


DOLLARS BACKED BY DOVE WITH SHARPEST CLAWS - CLICK HERE




Flash PMI https://reut.rs/4behm3T

Existing home sales https://reut.rs/45AtD1c

Leading economic index https://reut.rs/3KVbB06

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