Luxury Homes Help Push Home Prices Higher in July — Market Talk

1046 ET - U.S. home prices increased 0.27% month-over-month in July, Redfin says. That's essentially flat from a 0.28% growth rate in June. Prices rose 3.4% from a year earlier, the fastest annual growth in a year. Buyers are still contending with high housing costs including high mortgage rates keeping a lid on demand. At the same time, there are hundreds of thousands more sellers than buyers in the market. The strong luxury market is one reason why price growth remains fairly strong despite tepid demand, Redfin says. Luxury home prices are rising faster than non-luxury prices. Wealthy homebuyers are having an outsized impact on home-price growth, especially in affluent markets like the Bay Area and South Florida. Home prices rose in 29 major U.S. metros month-over-month on a seasonally adjusted basis in July, according to Redfin. ([email protected])1025 ET - Much like bitcoin, ethereum has been locked in range-bound trading for much of the summer, but the range is thinning, on either side of $1,900. "It remains below the 200-day moving average, while resistance near $1,950 is still intact," says Bret Kenwell of eToro in a note. "Active traders may now be waiting for a break from this tightening range, with bulls seeking an upside breakout and bears watching for support to fail." Ethereum is down 0.3% to $1,899 currently, while bitcoin inches 0.1% lower to $64,281. Other major cryptocurrencies are mixed. ([email protected])1012 ET - Treasury yields give back some of their sharp increases after fresh data indicates weakness in the U.S. economy. July housing starts fall 12.4%, deeper than the 6.1% shrinkage expected by forecasters surveyed by WSJ. July industrial production expands by 0.2%, versus expectations of 0.4%. Yields had been rising on concerns over the long-term stability of a heavily indebted government. Increasing supply of bonds issued by AI corporations also boosts yields. The 30-year Treasury yield remains high, at 5.314%, but lower than an intraday peak of 5.337%. The 10-year slips to 4.728% from 4.748% and the two-year is down to 4.179% from 4.20%. ([email protected]; @ptrevisani)0954 ET - A net 19% of investors think that corporate balance sheets are overleveraged, Bank of America's global fund manager survey for August shows. This is an increase from 7% in July and marks the highest proportion of investors who take this view since March 2023, the survey shows. ([email protected])0953 ET - A continued sharp rise in Treasury yields would potentially have negative dollar implications, Rabobank's Jane Foley says in a note. The Treasury market is suffering from concerns over the U.S. budget deficit, higher inflation and competition from corporate borrowing. Further pressure on Treasurys could test their safe-haven status, she says. The dollar's dominance in global payments means it should retain its own safe-haven status. However, a global shift away from the dollar could slowly erode its dominance in coming decades, she says. "This process would likely accelerate if the Treasury market's safe haven status becomes less anchored." The DXY dollar index trades flat at 99.607. Thirty-year Treasury yields hit a 19-year high of 5.337%, Tradeweb data show. ([email protected])0951 ET - A total of 71% of investors don't expect AI-linked capital expenditure to be cut in 2026, the Bank of America global fund manager survey for August shows. This is an increase from July when 61% of investors said they don't expect a cut in AI spending. By contrast, 21% of investors expect a cut in AI expenditure. ([email protected])0941 ET - If there is a Democratic sweep in the U.S. midterm elections, where the Democrats have a majority in both the House and the Senate, most investors expect bond yields would rise and stocks would fall, according to Bank of America's August global fund manager survey. A total of 37% of fund managers surveyed expressed this view. Another 17% expect bond yields would fall and stocks rise, while 16% expect both bond yields and stocks would fall, the survey says. The survey showed that a majority of 47% of investors surveyed anticipate a split Democratic House and Republican Senate, while expectations for a Democratic sweep fell to 23% from 27%. ([email protected])0911 ET - Investors have reasons to worry about inflation, but it may not be the main driver of rising bond yields. In fact, inflation expectations as measured by breakeven rates are fairly close to the Fed's 2% target in the long run. "Investors can believe inflation will average roughly 2-2.5% over the long run while simultaneously becoming less certain about that forecast because of oil, tariffs, fiscal policy and other supply shocks," Capital.com's Daniela Hathorn says in an email. The bond selloff is driven by "a combination of persistent inflation risks, heavy government borrowing and growing competition for capital rather than simply a sharp rise in expected inflation itself," she says. ([email protected]; @ptrevisani)0901 ET - A global bond selloff gains momentum, sending Treasury yields higher, as markets worry about government debt and higher bond supply amid a hot race to finance data-center construction. "A government paying more than $1 trillion a year just to service debt, with a fresh wave of long-dated issuance still to come, is a government whose bond buyers get to set the terms," deVere's Nigel Green writes in a note. Tensions in the Middle East keep oil prices elevated, fueling inflation fears. The 30-year Treasury yield reaches 5.318%, the highest since 2007. The 10-year rises to 4.738% from yesterday's settle of 4.725%. The two-year increases to 4.196% from 4.182%. ([email protected]; @ptrevisani)0856 ET - The sharp increase in U.S. Treasury yields, with 30-year yields hitting their highest since 2007, comes despite recent weaker economic data reducing expectations for an imminent Federal Reserve interest-rate hike, capital.com's Daniela Hathorn says in a note. Long-dated yields are rising due to risks of persistent inflation as the Middle East conflict raises energy prices. Additionally, heavy government borrowing and growing competition for capital--including debt issuance associated with the AI investment boom--are lifting longer-term borrowing costs, the senior market analyst says. Continued disruption in the Red Sea represents yet more uncertainty, Hathorn says. Thirty-year Treasury yields hit a high of 5.337%, Tradeweb data show. Ten-year yields hit a 19-month high of 4.748%. ([email protected])0848 ET - The rise in energy prices stemming from the Iran war poses a headwind to eurozone growth and the euro, MUFG Bank's Derek Halpenny says in a note. Europe faces a terms of trade hit from a further surge in energy prices, particularly natural gas prices, he says. Europe delayed winter gas purchases after the onset of the war and this appears to be backfiring, he says. Drought across Europe is also affecting food production and boosting energy demand. MUFG estimates that the euro is currently about 2.5%-3.0% overvalued versus the dollar. The euro could underperform if the above factors start to impact sentiment and economic activity, Halpenny says. The euro last trades steady at $1.1574. ([email protected])0835 ET - Bitcoin trades modestly lower along with U.S. stock futures as the prospect of a deal to end the Iran war dims. President Trump said he wouldn't seek an extension of the 60-day truce between the U.S. and Iran, which expired Monday, and threatened to bomb Oman. Markets are showing a more cautious tone as investors contend with rising long-term bond yields, renewed geopolitical uncertainty and some fresh nervousness around AI-related stocks, Capital.com analyst Daniela Hathorn says in a note. Bitcoin falls 0.1% to $64,274, LSEG data show. ([email protected])