The newest home sale figures reveal that the real estate market continues to sag without the support of homebuying tax credit. Most exchange traded funds (ETFs), already trading in a narrow range, fell on the news – although, there were some winners.Those tax credits, which expired on April 30, were supporting the market mightily: new home sales in May plunged 33% from a month earlier. Economists had been predicting a decline, but this caught them all off guard. It’s the latest round of bad news for an economy still struggling with high levels of unemployment and weak retail sales. [Why REIT ETFs Are Outperforming the Market.]
- SPDR S&P Homebuilders (NYSEArca: XHB) is down more than 1% so far this morning
The bad housing news was good news for PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) and CurrencyShares Japanese Yen Trust (NYSEArca: FXY), both of which were up slightly in early trading. The yen and dollar are benefiting from a flight to quality and risk-aversion in the markets. [Euro ETFs Riding High, But Can It Last?]
A survey of eurozone purchasing managers fell in June, causing spreads on Greek and Spanish debt to widen on fears that the economic recovery there was faltering. Most worrying is that demand for goods and services from Germany was way off; Germany is one of the world’s largest exporters. [European ETFs: Funds for a Greek Tragedy.]
- iShares MSCI Germany (NYSEArca: EWG) is down about 1% so far this morning
For more stories about Europe, visit our Europe category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.