Existing Home Sales Better Than Expected, Watch Copper & Miners

Housing Market Overview - Existing home sales reached 4 million, surpassing expectations of 3.96 million, indicating a slight consolidation in the data over recent months [2] - New home sales have seen a significant upward adjustment, with mortgage applications stabilizing as mortgage rates have decreased, providing a boost to home building stocks [3][4] - The current housing market is not experiencing deceleration in sales, and there is potential for buyers to re-enter the market to absorb excess inventory [5] Interest Rates and Economic Dynamics - The 10-year yield has been rising, which may impact home purchases, especially as it approaches 4.3% [8] - There is a seasonal slowdown to consider, but lower interest rates in the long term could lead to increased input prices for home builders, particularly for lumber and copper [8] Commodity Prices and Supply Chain Issues - Recent supply disruptions in copper production, particularly from Freeport McMoRan, are expected to increase pricing pressure in the refined copper market [11] - The shortage of copper ore is concerning for home builders, as recycled copper supplies are also stretched [12] - Companies with domestic copper mining operations, such as Southern Copper and Rio Tinto, may benefit from the current supply constraints [13][14] Economic Indicators - The GDP revision showed a surprising increase to 3.8% from a previous 3.3%, indicating stronger economic growth than anticipated [16] - Initial jobless claims were better than expected, suggesting resilience in the labor market, which may influence future Federal Reserve rate decisions [19][20]