EconoTicker

U.S. pending home sales posted a sharp downside surprise in December, falling -9.3% m/m (vs -0.3% expected, after +3.3% prior), with the Pending Home Sales Index dropping to 71.8 (vs 79.2 expected). Construction spending was mixed: September fell -0.6% m/m (after +0.4% prior), while October rebounded +0.5% m/m (vs +0.1% expected, after -0.6%). The outsized drop in pending sales points to a sudden cooling in transaction activity—likely reflecting affordability and rate sensitivity—even as building outlays show uneven momentum.

Market impact: Dovish tilt for rates if housing weakness persists (supportive for Treasuries), negative for homebuilders and housing-linked cyclicals; the market will watch whether mortgage-rate easing translates into a rebound in contracts in the next prints.

The latest Redbook same-store sales index showed annual retail sales growth easing to +5.5% y/y, down from +5.7% previously. The small dip suggests consumer spending momentum remains solid but is cooling marginally at the margin.

Market impact: Typically a low-tier market mover, but modestly supports a “slowing but resilient” consumption narrative—slightly constructive for a soft-landing view and broadly neutral for USD unless corroborated by wider retail and jobs data.

U.S. mortgage activity jumped even as rates ticked lower. The MBA 30-year mortgage rate eased to 6.16% (from 6.18%), while mortgage applications rose 14.1% w/w (after 28.5% previously). The Purchase Index climbed to 194.1 (from 184.6), the Mortgage Market Index rose to 397.2 (from 348.0), and the Refinance Index jumped to 1,580.8 (from 1,313.1), signaling improved rate sensitivity and renewed borrower activity.

Market impact: Slightly constructive for U.S. housing sentiment and rate-sensitive equities; supports the “soft landing” narrative if sustained, but the outlook remains tied to the path of Treasury yields and broader financial conditions.

U.S. Treasury Secretary Scott Bessent told Davos Europeans should avoid retaliatory moves to Trump’s proposed tariffs, warning against a replay of damaging trade spirals; European countermeasures remain a key talking point.

Market impact: Keeps a headline-driven risk premium in place; supportive for gold/FX havens on escalation headlines, while cyclicals may lag.

U.S. Commerce Secretary Howard Lutnick said he expects U.S. first‑quarter growth above 5% (even higher if rates fall), and cautioned the EU against retaliatory tariffs amid the Greenland-linked dispute.

Market impact: Nudges expectations toward higher growth / rate‑cut debate; can lift rate-sensitive volatility and widen dispersion across sectors.

U.S. Treasury bill auction yields edged higher, signaling marginally firmer short-term funding rates. The 3-month bill cleared at 3.590% (vs 3.570% prior), the 6-month bill at 3.520% (vs 3.490%), and the 52-week bill at 3.390% (vs 3.380%). The uptick is consistent with steady money-market demand but slightly tighter pricing at the front end as investors keep a close eye on Fed timing.

Market impact: Mildly supportive for the USD and front-end yields at the margin; limited broader impact unless bills continue to reprice higher or spill over into funding stress indicators.

The latest weekly ADP employment change came in at +8.0K, down from +11.25K previously, pointing to a modest cooling in near-term private-sector hiring momentum. While weekly ADP data can be noisy and doesn’t always track nonfarm payrolls closely, the softer print adds to evidence that the labor market may be normalizing at the margin.

Market impact: Slightly USD- and yields-negative at the margin if reinforced by other labor indicators, supporting a “Fed can stay on hold” narrative; equities may take mild comfort from reduced overheating risk, but the broader reaction typically hinges on official payrolls and inflation prints.

The U.S. Supreme Court released decisions on Tuesday but did not issue a ruling on the closely watched case challenging President Trump’s global tariffs, leaving the legality of the levies unresolved. The court did not provide a timetable for when it will take up the tariff case, consistent with its practice of not pre-announcing which opinions it will release on a given day—meaning the decision could still arrive on any future opinion day, with timing uncertain.

Market impact: Prolongs policy uncertainty around trade—and by extension USD, U.S. rates, and global risk sentiment—as investors keep a “legal-risk premium” in pricing until the court clarifies the scope of presidential tariff authority.

The U.S. 10-year Treasury yield rose 3.0 bps to 4.2586% on Tuesday, while Fed funds futures continue to price an implied 95% probability the Fed will keep rates unchanged at its Jan. 27–28 meeting, little changed from Friday (per CME FedWatch).

Market impact: A steady “hold” baseline limits near-term policy surprises, but higher long yields can keep equity duration under pressure and support the USD on rate differentials if the move extends.

U.S. builder confidence weakened in January, with the NAHB Housing Market Index dropping to 37 (40 expected, 39 prior). The decline signals a softer tone in new-home conditions—typically reflecting the drag from financing costs, affordability constraints, and buyer sensitivity to mortgage-rate volatility. At this level, sentiment remains subdued, implying builders are still cautious despite pockets of resilient demand.

Market impact: Mildly growth-negative at the margin for housing-related activity and slightly bond-supportive, while it can weigh on homebuilder stocks if corroborated by slower sales/permits. Broader USD impact is usually limited unless the housing slowdown becomes more pronounced in hard data.

U.S. industrial activity finished December on a stronger footing. Industrial production rose 0.4% m/m (0.1% expected, 0.4% prior), showing momentum held up into year-end. Manufacturing production increased 0.2% m/m (-0.2% expected, 0.3% prior), a clear upside surprise that points to steadier factory output. Capacity utilization increased to 76.3% (from 76.0% expected and 76.1% prior), consistent with slightly tighter use of industrial capacity. Year-over-year, industrial production increased by 1.99% (down from 2.68% previously), indicating that the annual pace cooled even as the monthly trend improved.

Market impact: Mildly USD-supportive and Treasury-bearish at the margin (firmer activity can reduce urgency for near-term easing), while equities often take it as supportive for industrials/cyclicals. The key question is whether the improvement persists in orders and ISM/PMI data.

The Federal Reserve’s balance sheet edged higher, with total assets at $6,582B versus $6,574B previously. Small weekly moves are common and typically reflect routine changes in reserve balances, Treasury/agency holdings runoff mechanics, and short-term liquidity operations rather than a meaningful shift in policy stance.

Market impact: Usually market-neutral. The bigger driver remains the pace and composition of QT, funding-market conditions, and how balance-sheet runoff interacts with Treasury issuance and money-market liquidity.