Tuesday, March 23, 2010

Economics Headlines-US Richmond Fed-EU Summit/Greece Update

Economics Headlines

·         Existing home sales for February held up better than expected in light of the sharp decline in January pending home sales. Existing home sales edged down 0.6% to 5.02mn (consensus 5.00, JPMorgan 4.80). February existing home sales reflect closings based on purchase contracts signed in prior months, so February snowstorms should not have affected the results. This is apparent in the details; sales increased in the Northeast and Midwest. The supply of homes on the market (reported nsa) did rise 9.5% and the months' supply rose from 7.8 in January to 8.6 months in February.  Mellman.     

·         US Richmond Fed survey came in a bit ahead of expectations at 6 (vs. the St at 5) 

·         EU Summit/Greece Update - It looked as if the Greek crisis would reach some sort of climax at this week's EU summit: either the German position would soften and a concrete proposal for Greek support would be put on the table, or the Greeks would go to the IMF. In fact, as we approach Thursday's meeting, the outcome could be somewhat different.  Essentially it looks as if the Germans are sticking to their position, which means that no detailed plans will be revealed this week.  In theory, the Greeks could follow through with their threat to go to the IMF, but given the more assertive German position we doubt that they will do so. The onus will then be on the Greeks to continue with the fiscal consolidation at a higher borrowing cost than they would ideally like, but in the expectation that as the deficit narrows so will spreads

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