LIVE MARKETS-Two-fer Tuesday: Case-Shiller, Chicago PMI

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TWO-FER TUESDAY: CASE-SHILLER, CHICAGO PMI

Investors were treated to two bite-sized indicators on Tuesday.

First, home prices in major U.S. cities rose by 0.3% in October, more robust than the mere 0.1% growth economists predicted.

Year-over-year, the Case-Shiller 20-city composite USSHPQ=ECI increased by 1.3%, cooler than September's 1.4% annual increase, but a smidgeon north of the 1.3% consensus.

"For context, this is the weakest annual home price growth since the March through July 2023 period, when the market was absorbing the initial shock of the Fed’s rapid rate hikes,” says Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones. “But today’s headwinds appear more entrenched."

"Elevated mortgage rates, paired with inflation that continues to outpace home price gains, have intensified affordability pressures, potentially setting a new equilibrium of minimal price appreciation or, in some markets, outright declines,” Godec adds.

Among the cities in the composite, Chicago and New York once again led the year-over-year gainers, rising 5.8% and 5.0%, respectively. Alas, poor Tampa was once again the biggest loser, with home prices down 4.2% from a year ago.

Switching gears, Midwest factory activity continued to slide this month, but at an unexpectedly decelerated pace.

MNI Indicators' Chicago purchasing managers' index (PMI) USCPMI=ECI delivered a reading of 43.5, or a 7.2-point improvement over November's dire 36.3. Economists called for a reading of 39.8.

A PMI reading south of 50 indicates monthly contraction, and a number below 43 is widely associated with recession.

Market participants will get a clearer picture of the state of U.S. manufacturing on Monday, when the Institute for Supply Management (ISM) releases its nationwide PMI.

Analysts expect that report to show a nominal 0.1-point improvement to a still-contractive 48.3.

(Stephen Culp)

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