Daily Market Color May 24, 2018Risk Assets Struggle After North Korea Summit Canceled North Korea Summit Called Off In a letter to North Korean leader Kim Jong Un, today President Trump declared that the proposed summit between the United States and North Korea scheduled for June 12th would no longer be taking place. Trump specifically highlighted the “tremendous anger and open hostility displayed in your most recent statement”, in reference to a series of antagonistic comments from North Korean officials related to their discontent with the White House’s plan and timeline for the denuclearization of the nation. The letter wasn’t entirely negative as it included hopeful comments such as “I felt a wonderful dialogue was building up between you and me, and ultimately, it is only that dialogue that matters. Some day I look very much forward to meeting you.” However, during a press conference afterwards Trump acknowledged the potential for crisis and advised that the US military was prepared for action if prompted by North Korea. With the potential for heightened geopolitical uncertainty with North Korea, the immediate reaction from financial markets was a flight to safety, as US Treasurys and gold futures rallied while stocks pulled back. Safe haven assets retraced a portion of their gains as the session went on, with yields/swap rates ultimately finishing 1-3 bps lower across the curve and gold trading above $1,300/ounce for the first time in a week. Major US stock indices managed to limit losses to 0.3% on the day, with the largest losses being recorded in the energy sector. In commodities, WTI crude futures finished 1.6% lower for the session at $70.65/barrel. Existing Home Sales Struggle Sales of previously owned homes in the US were weighed down by the continual buildup in prices and tightening of inventory. Existing home sales last month totaled a seasonally adjusted annual rate of 5.46 million, missing expectations of 5.55 million and falling 2.5% from the prior month’s level. Compared to a year earlier, sales of previously owned homes were down 1.4%. Median sale prices increased 5.3% YoY in April to $257,900. There were 1.80 million homes in inventory last month according to the report (down 6.3% from a year ago), corresponding with a 4.0-month supply of homes on the market based on the current sales pace. Other key economic data released today included a report from the Labor Department which showed initial jobless claims in the US rising for a second consecutive week, albeit holding near the lowest level since December 1969. The number of new claims for the week ended May 19th increased by 11,000 to a seasonally adjusted 234,000 (220,000 expected), while the four-week moving average of claims rose by 6,250 to 219,750. Also detailed in the report, the number of continuing claims climbed by 29,000 to 1.74 million for the week ended May 12th.