Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Sunday, April 23, 2006

Debt Investors Eye Housing Sales


"(Reuters) - Soaring commodity prices and US economic data should capture the attention of emerging debt investors this week as any indication of rising inflation could push the
Federal Reserve to keep raising interest rates."

"Emerging market bond prices are likely to trade in tandem with US Treasuries, which have zigzagged according to the strength or weakness of the economic data released."

"Investors will eye US sales of existing and new homes as well as consumer confidence and sales of durable goods, yet the key figure this week should be the advance first-quarter gross domestic product report due on Friday."

"US sales data for existing homes and new construction for March to be released on Tuesday and Wednesday respectively should shed some light on the strength of the economy."

'"Everything that is coming out of the housing market continues to fall. We know there is a slowdown but we still don't know how much of that is going to pass through into the consumer side," Enrique Alvarez, Latin America strategist at IDEAglobal added."

'"New concerns about inflation, especially of oil prices, raises questions about the outlook for inflation in developed economies (that) could certainly upset that equation and drive emerging market spreads higher again," Stracke said."

"Crude oil hit a record high in New York on Friday above $75 a barrel on fears of a possible supply disruption in Iran and low US gasoline supplies."

"The US central bank has raised short-term interest rates 15 times since mid-2004, lifting its fed fund rate to 4.75 percent, aiming to keep the expansion going without allowing inflation to shoot up."

"Higher US rates narrow the gap with high yielding emerging market debt, reducing their appeal over US Treasuries."

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