Core PCE Steadies, Existing Home Sales Higher, Japan Raises Rate to Historic Levels

Consumer Sentiment - Consumer sentiment has drifted lower since October 2024, stabilizing slightly above the 50 level, with core sentiment estimates at 53.5% but coming in at 52.9%, lower than the previous 53.3% [2][3] - Expectations for consumer sentiment were around 55, but the actual print was 54.6%, indicating a slight decline in both sentiment and future expectations [3] Existing Home Sales - Existing home sales were over 6.5 million units in 2021 but have since stabilized slightly above 4 million, with the current month’s sales at 4.13 million, slightly below the estimate of 4.15 million [5] - Month-over-month readings showed a 0.5% increase, which is lower than the previous 1.5% [6] - Long-term trends indicate that current levels of existing home sales are among the lowest seen in the past 40-45 years, reflecting ongoing weakness in residential investment [7] Geopolitical Developments - The EU has approved a loan package of approximately €90 billion (about $105 billion) to Ukraine, which is not utilizing frozen Russian assets due to ongoing legal disputes [8][10] - This funding aims to address Ukraine's financial needs without escalating tensions with Russia, highlighting the importance of maintaining diplomatic negotiations [9][10] Central Bank Actions - The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 0.75%, the highest since 1995, but the yen weakened, attributed to less hawkish commentary from the BOJ [11][12] - The interest rate differential between Japan and the United States remains significant, with U.S. rates around 36-37 basis points higher, contributing to the yen's volatility [14][15] - Traders are monitoring potential interventions by Japanese authorities to support the yen, especially as trading volumes may thin due to upcoming holidays [17]