US house prices soaring

Annual growth rate will soon exceed 10%

Chart of the Day

US house prices are soaring, with the Case-Shiller index showing that house price inflation rose to 9.5% at the end of year. If we annualize the rate from just the past three months, it’s over double that at 19.7%. Low mortgages rates as well as the shift toward large properties are the cause, and with the Fed showing little sign that it wants to tighten policy any time soon, there’s plenty of reason to think prices will keep rising.

Macro

US consumers continue to rate the present situation very poorly.

The Dallas Fed services index implies activity slowed sharply in January.

In the UK, weekly earnings have rebounded strongly since the lockdowns.

Markets

There some signs of weakness underneath the hood of the equity market, with the equal-weighted S&P 500 starting to drop back.

That said, it was momentum shares that dropped back relatively to value stocks today.

Cyclical stocks have generally weakened in the past week - with the exception of real estate.

Tech stocks and real estate stocks have benefited from the reduction in real yields.

Italy’s bond market stands out, with yields rising amid political uncertainty there.

Marginally lower real yields have not done much for gold though.

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