The new home sales data for May 2024 reveals a worrying trend in the housing market. While sales came in slightly below estimates at a seasonally adjusted annual rate of 619,000, the total active inventory of completed new homes ready for sale has surpassed 2019 levels, reaching 99,000 units. This inventory buildup is causing some builders, particularly smaller ones, to be cautious about issuing new permits, leading to a three-month decline in single-family permits. The majority of the new home supply is still under construction or has not yet started, with builders taking a cautious approach to managing their backlog. Economists expect new home sales to remain limited until mortgage rates get cheaper, with a slight rebound expected in the latter half of 2024 if the Federal Reserve begins to cut rates.

EQUITY

U.S. equity indexes closed mostly higher on Wednesday, with the Nasdaq Composite and S&P 500 ticking higher, while the Dow muted. FedEx shares shot up 16%, nearing $300 after earnings, while Moderna's fell 11%, reporting lower vaccine efficacy compared to competition. Major U.S. banks saw their shares slip after the Federal Reserve's annual banking sector stress test results showed reliability to withstand a severe recession and remain above minimum capital requirements despite higher projected losses.

GOLD

Gold prices have been hovering around a two-week low ahead of the PCE price index, and GDP is estimated to gain insights into potential Federal Reserve interest rate cuts moving forward. The strength of the dollar, which is near an eight-week high with the potential to go higher, has made gold expensive to hold. Price is expected to fill imbalance before pushing in either direction.

OIL
Oil prices dip slightly from its highs after U.S. crude oil and gasoline inventories came in much higher than expected. The U.S. Energy Information Administration reported a 3.6 million barrel jump in crude oil stocks and a 2.7 million barrel rise in gasoline stocks, contrary to analysts' expectations of a steady drawdown. However, the market remains in a tug-of-war situation, with potential supply disruptions from Middle East tensions providing some support for prices to close higher than Tuesday.

CURRENCY

The yen hit a 38-year low against the dollar thanks to wide interest rate differentials between the U.S. and Japan. This decline has previously brought about intervention from Japanese authorities, who spent 9.79 trillion yen to support the currency, although there is doubt that they will be able to redo it now that it has reached the same level. Meanwhile, the dollar index remained near an eight-week high, supported by risk in the European election, the Fed's "higher-for-longer" narrative, and the ECB, which has not cut rates even at 2% inflation.