Market Wrap – Better market mood

Stock markets started to advance, and the US dollar gained strength due to a better tone in markets today, following Republican comments on the debt ceiling have been more constructive.

President Biden gave comments to the media saying that “We’re going to come together because there is no alternative” and “This negotiation is about the outlines of what the budget will look like.”

The VIX dropped by around two percent on these comments and gold prices eased, marking a sign of relief in the market that US will avoid a looming default on June 1^st.

Biden also added that “The leaders all agree that we will not default” and “It would be catastrophic if the US did not pay its bills.” Finally he noted that he will continue discussions until we reach a deal.

Over in the Senate, minority leader McConnell said that “After meeting with Speaker McCarthy, the president finally, finally designated specific members of his staff to negotiate with the speaker’s office directly. I’m glad he’s taken advice I gave him back in February.”

Housing starts in the US unexpectedly increased 2.2% month-over-month to a seasonally adjusted annualized rate of 1.401 million in April of 2023, compared to market forecasts of 1.4 million.

Data for March was revised sharply lower to 1.37 million from 1.42 million, as high prices, interest rates, and tighter lending standards continue to weigh.

Single-family housing starts, which account for the bulk of homebuilding, increased 1.6% to a four-month high of 846,000 and starts in buildings with five units or more surged by 5.2% to 542,000.

Building permits in the United States decreased by 1.5 percent to a seasonally adjusted annual rate of 1.416 million in April 2023, according to a preliminary estimate.

This decline represents the second consecutive month of decreased building permits, indicating ongoing pressure on the housing market mainly due to the impact of rising interest rates and persistent high inflation.