Market Dips Amid Housing Market Shift and Yield Curve Inversion | June 20, 2023

Stock index futures indicate a softer opening this Tuesday, following a string of gains from the previous week. The S&P futures #SPX, Dow futures (INDU), and Nasdaq 100 futures #NDX are all trending lower, with reductions of 0.4%, 0.3%, and 0.7% respectively. In parallel, there has been a drop in the 10-year and 2-year Treasury yields, each by 3 basis points, with the former now at 3.79% and the latter at 4.73%. This shift in yield curves already reflects the hawkish turn from central banks, and any further yield increases are expected to be driven by economic data rather than policy changes.

On the housing front, May's figures for starts and permits are expected to show a slight dip in the former to an annual rate of 1.4 million, while permits are predicted to rise to 1.425 million. This subtle shift comes amid a broader reconfiguration of the housing market. Rather than being at the outset of recovery, the market is seen as transitioning from a collapse in demand, sales, and construction, towards a downturn in prices and housing-related consumer spending. Despite the inversion of the US yield curve, the anticipation of substantial future rate cuts could maintain its persistently inverted state. #News #MarketUpdate