Daily Market Color January 24, 2018Dollar Dominates Davos Discussion Existing Home Sales Fall, Supply Hits New Low The combination of rising real estate prices and limited supply is making home ownership in the US a much more difficult proposition for prospective buyers. The December existing home sales came in at annual rate of 5.57 million, below the estimate of 5.7 million. In the prior month the annual pace was revised down from 5.81 million to 5.78 million, thus the December 5.57 million annual pace represented a 3.6% monthly drop. In total, 5.51 million existing homes changed hands in 2017. Median sale prices were up on the year 5.8% to $246,800, far higher than inflation. There are currently 1.48 million homes in inventory according to the report (the lowest since such records began being kept in 1999), which could be depleted in 3 months at the current pace homes are changing hands. Davos Brings Talk of Weaker Dollar US Treasury Secretary, Steve Mnuchin was in Davos at the World Economic Forum, and he might just make the cost of his trip a little more expensive with his protectionist comments. Mnuchin made the case for a weaker US dollar (USD) although many were quick to clarify that he was not trying to push the USD lower, just describing the effects of that scenario. Mnuchin’s main point was that a weak USD will help push export-led growth. On the back of these comments the USD was down again most major currencies. The USD lost: 0.82% vs the Euro (EUR), 1.11% vs the Japanese Yen (JPY), 1.46% vs the United Kingdom (GBP) and 1.24% vs the Swiss Franc (CHF). Equity Market Has Muted Reaction, Bonds Selloff Equity markets are finishing today’s trading session generally softer, but close to unchanged. The S&P 500 (-0.05%) and Nasdaq (-0.25%) edged lower while the DJIA (+0.16%) posted a slight gain. US Treasurys sold off 4 bps on the day, with the yield on the 10-year note back up to 2.65%. In commodities, WTI crude climbed 2.4% to $66/barrel (the highest level in more than two years) and 50% above the June 2017 low, largely due to the weaker dollar and protectionist stance of US officials in Davos.