October 17, 2019
U.S. Home Starts Fall From 12-Year High on Multifamily Drop
“U.S. new-home construction in September pulled back from a 12-year high though the key single-family category was stable, signaling the housing market is firming amid low mortgage rates and steady demand. Residential starts fell 9.4% to a 1.26 million annualized rate on weakness in the multifamily category after an upwardly revised 1.39 million pace in the prior month, according to government figures released Thursday that missed estimates in Bloomberg’s survey. Permits, a proxy for future construction, dropped 2.7% to a 1.39 million rate that exceeded estimates. Groundbreakings for single-family properties proceeded at the fastest pace since January. That gain was offset by a 28.2% drop in new construction of apartment buildings and condominiums, a category that tends to be volatile. The report reflects some cooling as starts pull back from the best pace since 2007 the prior month. Building has stabilized amid low mortgage rates, higher wages and a tight labor market, with housing showing signs of positive momentum after remaining a drag on economic growth since 2017. Private data on Wednesday showed homebuilder sentiment rose in October to the highest since February 2018 as measures of prospective buyer traffic, sales and demand all improved. Data out next week are forecast to show existing-home sales, which make up the majority of the U.S. housing market, eased in September along with new home sales. A separate report Thursday indicated that the labor market remains generally healthy, as jobless claims edged up last week but were still low by historical standards. On the other hand, a Federal Reserve Bank of Philadelphia regional factory index fell to a four-month low, adding to signs of weakness in manufacturing.”
EU and U.K. Reach Agreement on Brexit But the DUP Still Says No
“Negotiators from the U.K. reached an agreement with officials in Brussels Thursday that could pave the way for Britain to finally break 46 years of ties with the European Union. But Northern Ireland’s Democratic Unionist Party said it still can’t support the deal. That makes the parliamentary arithmetic a lot tighter for British Prime Minister Boris Johnson, who needs the backing of the House of Commons in a vote expected Saturday in order to deliver an orderly Brexit on October 31. Three DUP officials said their party won’t support the deal, saying they were unhappy about customs checks in the Irish Sea, among other things. Johnson’s been defeated in a string of crucial votes since taking office in July and lost his majority in the chamber. Nevertheless, the prime minister announced the agreement with an upbeat tweet. Appearing with European Commission President Jean-Claude Juncker in Brussels hours after the deal was confirmed, Johnson called it “a reasonable, fair outcome that reflects the large amount of work undertaken by both sides.” The U.K. would leave the EU “whole and entire” on Oct. 31, Johnson said, in a nod to the DUP’s concerns. Juncker said “there’s no need for any kind of prolongation” to the deadline, adding that he was happy about the deal but “sad about Brexit.” Without his Northern Irish allies, Johnson needs to pick up roughly 61 votes from a pool of about 75 deputies who might be persuaded to join him — that will involve persuading hold-outs in his own party to side with him rather than the DUP. It’s the final, treacherous hurdle for the U.K. leader to clear before he can complete his ambition of leading Britain out of the EU. The pound rallied on news of the deal, touching $1.2990 before dropping again as the scale of the remaining challenge became clear. It traded 0.3% lower at $1.2797 at 1:12 p.m. in London.”
China Says It’s Working on Trade Agreement Text With U.S.
“Chinese officials are working on the text of an agreement on trade in close contact with U.S. negotiators, and have begun discussions on the next stage, Ministry of Commerce spokesman Gao Feng said at a regular briefing in Beijing Thursday. “The two sides are in the process of consultation on the text of the first phase agreement and are having specific discussions on the work arrangements for the next phase,” Gao said. China’s aim is to end the trade war and remove all tariffs, Gao said, reiterating the government’s standard position in the trade war with the U.S. Bloomberg reported that Beijing needs further talks before it is ready to sign an agreement first made verbally last week, which would see China increase agricultural purchases from the U.S. in exchange for a limited reprieve on tariffs. The U.S. claimed China agreed to gradually increase buys of soybeans, pork and other farm goods to $40 billion to $50 billion annually at the most recent talks, but China hasn’t confirmed that. Gao declined to comment when asked about that number. “Chinese enterprises will increase their purchases of American agricultural products according to domestic needs,” and the United States will create good conditions for those purchases, Gao said. He also repeated a previous statement from the Foreign Ministry listing all the agricultural purchases China has made so far this year. “Chinese companies are still increasing their purchases of American agricultural products according to the needs of the domestic market,” he said. “The Chinese market is huge. Ending the trade war as soon as possible and abolishing the imposition of tariffs will be conducive to the expansion of bilateral cooperation in a broader economic and trade field, including agriculture.” The yuan extended gains after Gao made the comments, with the onshore rate advancing to 7.0785 as of 4:55 p.m. in Shanghai. ”
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