No gain, much pain. Real estate investors have witnessed a substantial reduction in their involvement in the US housing market, with an average 50% decline in investor home purchases during the initial quarter of 2023. This decline is unprecedented in US history and can be attributed to the surge in interest rates, rendering it unprofitable for investors to engage in rental property investments as mortgage payments offset potential profit, although not at the point of selloffs yet. The areas that experienced the most pronounced decrease in investor activity were primarily located in the Sun Belt, while the Northeast and Midwest regions demonstrated relatively better resilience, primarily due to their lower dependence on external funding and stronger connections with local investors.
U.S. stocks closed lower as Congress prepared to vote on raising the debt ceiling and stronger labour market data fuelled fears of a June interest rate hike by the Fed. The House is expected to vote on the bill before it moves to the Senate, with analysts predicting swift approval. President Biden aims to have the debt ceiling bill on his desk by Monday, raising the discretionary spending limit to $3 trillion.
Gold prices rose on Thursday, driven by expectations of the Federal Reserve keeping interest rates steady in June and concerns over the U.S. debt ceiling vote. Philadelphia Fed President Patrick Harker's comments about a potential rate hike delay sparked a shift in market sentiment towards a June pause, boosting gold prices. Although the dollar slightly declined, it remained close to 10-week highs. The ongoing U.S. debt ceiling vote and global economic conditions may further support gold prices.
Oil prices declined for the third consecutive session as data revealed a significant increase in U.S. crude inventories, leading to concerns about oversupply and weakened Chinese demand. Furthermore, the unexpected growth in gasoline inventories added to the bearish sentiment. Investors are now awaiting the release of IEA data on crude stocks and closely monitoring the upcoming OPEC+ meeting for any potential price movers.
Asian currencies gained as the US dollar declined slightly, influenced by Fed officials hinting at a pause in the next June meeting. The approval of a bill to raise the US debt ceiling by the House of Representatives reached broad bipartisan support, reducing worries of a US default. Despite a rebounding Chinese yuan prompted by positive manufacturing data, concerns persisted over China's economic recovery and weakened yuan.