23 Oct2023 Reports

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US Market (By Phillip Global Markets Night Desk)

23 October 2023

Housing Trade Groups Tell Fed to Halt

The Mortgage Bankers Association, the National Association of Realtors, and the National Association of Home Builders sent the Fed a message of "profound concern" via a recent joint letter. With mortgage rates at a 23-year high and mortgage applications at the lowest level since 1996, the important trade groups asked the Fed to make two clear statements to the market. First, the Fed does not contemplate further rate hikes and, second, the Fed will not sell any of its mortgage-backed securities until and unless the housing finance market has stabilized and historically high mortgage-to-Treasury spreads have normalized. Amid an historic shortage of affordable housing, the groups said the best way to tame shelter costs that have been boosting CPI is to "facilitate the construction of attainable, affordable housing." The 30-year fixed-mortgage rate rose to 7.63% recently, according to Freddie Mac, and hasn't been below 6.5% since May. The trade groups told the Fed that market uncertainty about rate hikes has pushed mortgage rates higher than they would otherwise be and is costing homebuyers an extra $245 a month on a standard $300,000 mortgage. Homebuilder' confidence declined for a third month in October and existing-home sales for September declined 15.4% from prior-year levels (to a 13-year low of 3.96 million homes at a seasonally adjusted annual rate). We expect new-home sales for September to rise to 650,000 (SAAR) from a year earlier, but decline from 675,000 in August. The S&P/Case-Shiller National Home Price Index for August will be released on October 31. We expect home prices to remain elevated. Existing-home prices were up 2.8% in September. In this tumultuous housing market, Argus recommends Lennar, D.R. Horton and Toll Brothers -- companies that are adapting to market conditions.

Market Wrap

Stocks staged a broad retreat after the 10-year Treasury yield topped 5%, fueling concern that soaring borrowing costs will erode economic growth.

The yield on the 10 year jumped as much as 11 basis points to 5.02%, the highest since 2007. Europe’s Stoxx 600 index sank 0.6%, reaching the lowest intraday level since March. S&P 500 equity futures fell 0.5%. Copper, viewed as a benchmark for the global economy, tumbled to the lowest in nearly 11 months.

Today's Big News

- Treasury 10-Year Yield Breaches 5% for First Time Since 2007 (2)

- Israel Latest: EU Set to Seek Pause in War to Allow Aid to Gaza

- Chevron to Buy Hess for $53 Billion in Latest Oil Megadeal (3)

- Ex-ASML Staff Accused of Theft Went to Work for Huawei, NRC Says

- Oil Holds Near $92 With Israel Seen Holding Off Invasion For Now

- Morgan Stanley’s Wilson Says Profit Estimates Are Too High (1)

OCBC

DBS

Market News

China central bank injects RMB733bn (US$100bn) of extra liquidity into the economy, its largest on record
Regional US banks tumbled on 4Q guidance of continued net interest income decline
American Express’ 3Q EPS of US$3.30 beats estimates on strong consumer spending

Singapore Reopening Stocks

3 stocks that should see positive read-through from MBS’ 3Q operating performance

Resurgence of tourist inflow underpinned Marina Bay Sands' (MBS) strong operating performance in 3Q
Family summer holiday travel in Jul-Aug drove the recovery of flight capacity from China to Singapore back to 77% of pre-pandemic level
What are the 3 stocks that should benefit from this positive read-through?
Click here to read our views

ComfortDelGro Corporation Ltd (CD SP)

Competition jeking up in Singapore ride hailing space

Gojek to lower driver commissions in Singapore from 15% to 10% to attract more drivers amid supply crunch
A tiered distance based cashless transaction fee also to be introduced and 15% promo code to defray higher fees and attract more riders
How will Gojek’s new commission and incentive impact the company?
Click here to read our views

Luxshare Precision Industry Co Ltd (002475 CH)

4Q23 earnings guidance slightly missed market expectations

Management guides 23-39% earnings growth for 4Q23, lower than consensus of 42%, due to uncertainties in consumer market
Expect iPhone penetration and market share gain in Apple’s non-iPhone products to continue in FY24, despite the low-single-digit growth in global smartphone shipment
Why we remain optimistic of the long term growth prospect of the company?
Click here to read our views

DBS Group Research | Equity Picks

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