Closing post
Time to wrap up…
The Bank of England has warned that financial markets are at risk of a “sharp correction” in the future, as investors are only focusing on good economic news.
The BoE says:
The prices of many assets such as shares and bonds remain high relative to historical norms, and some have continued to rise. This suggests that investors in financial markets are continuing to expect the economy to recover and inflation to fall.
They are placing less weight on risks, such as geopolitical developments or continued high inflation, that might cause weaker growth or interest rates to stay higher than expected.
These risks make it more likely that there could be a sharp correction in asset prices that could ultimately make it more costly and difficult for UK households and businesses to borrow.
In its latest financial stability report, the BoE also warned that millions of UK households who are paying relatively low mortgage rates will see monthly repayments jump in the next two years.
It also flagged the risk that global elections could destabilise the UK financial system…. while China’s property slowdown is another threat.
In other news…
The US economy grew a little faster than thought in the first quarter of the year, by an annual rate of 1.4%.
Japan has issued fresh warnings over the weakness of the yen, which has hit a 38-year low against the US dollar this week at around 160 yen to the $.
Elon Musk’s SpaceX has been valued at about $210bn based on the value of insider shares being sold in a tender offer,
Updated
US pending home sales fall in May
There are new signs of weakness in the US housing market today.
Contracts to buy U.S. previously owned homes unexpectedly fell in May, by 2.1%, indicating that high mortgage rates and expensive homes are deterring buyers.
The National Association of Realtors (NAR) reported that pending home sales fell in the densely populated South and the Midwest on a monthly basis, but rose in the Northeast and West.
Year-over-year, all U.S. regions registered reductions.
“The market is at an interesting point with rising inventory and lower demand,” said NAR chief economist Lawrence Yun, adding:
“Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”
US Pending Home Sales not looking good - real estate market heavily under pressure pic.twitter.com/qCAGQ5e24u
— Dr. Johannes Reeg (@johannesreeg) June 27, 2024
