Monthly Report: March 2025

United States

On the macro front during March, the main positive we saw was inflation, and core inflation came out slightly lower than expected (both 0.2% vs. 0.3% expected). GDP growth quarter on quarter was 2.4% vs. the 2.3% expected. PMIs continued to improve on the services front (53.5 vs. 52.7 expected) while manufacturing remained in growth territory but lagged (50.3 vs. 51 expected). On the other side, retail sales disappointed as they showed a 0.2% increase vs. the 0.5% expected, and unemployment ticked up to 4.1% from the 4% previous print and consensus. As expected, the FED kept interest rates unchanged, and appeared more dovish in its projections and press conference, citing that recession fears are low for now.    

The 30-year mortgage rate is currently at 6.65%, down around 10 bps from last month, while the 15-year mortgage rate is at 5.95%, marginally lower than last month. The drop in inflation and big drawdowns on energy have helped bring down inflationary expectations; however, tariffs/trade wars still mean uncertainty is priced in the market. Ultimately, we need to see more rate cuts from the FED to see any meaningful movement on the mortgage rates.

Existing home sales increased by 4.2% in February after a 4.7% drop in January.  Housing inventory increased by 5.1% M-o-M, equating to around 3.5 months of supply (down from 3.9 months). We are still at low levels compared with the pre-2023 period. However, the trajectory has been positive since September 2024, given where mortgage rates are. Importantly, the data suggests that the big drop in January resulted from external factors such as weather and not the start of a downward trend.

Sales of new homes increased by 1.8% in February, partially reversing the 6.9% drop recorded in January, but were slightly softer than expected. The inventory of new homes is much higher, standing at around 9 months of supply at the current prices.

Housing starts jumped 11% last month after a similar drop in January. This proves that the snowstorms and cold temperatures impacted the data, preventing normal construction.

United Kingdom

Once again, mixed toward positive macro sentiment from the UK with the BoE keeping rates at 4.5%, which was followed by inflation printing softer than expected (2.8% vs. 3% YoY). As a reminder, a slightly higher inflation print led to the rate cut a month ago. On the other hand, GDP was softer than expected (-0.1% vs. 0.1% expected month on month) and retail sales continued to outperform their forecast (1% vs. -0.2% expected MoM). Unemployment was again stable and on par with expectations, while PMIs maintained their trend, with service sentiment printing 53.2 (vs. 51.1) and manufacturing getting even worse (44.6 vs. 47 expected).  

The Halifax house index deteriorated slightly month over month, showing a 0.1% loss compared to the expected 0.3%. Year over Year, the index still gained 2.9% but fell short of the 3% expectation.

The Price Balance survey from RICS showed that the market was still in a very strong price appreciation mode, showing +11% for February, following +22% for January and +26% in December. According to most metrics, there might be a slowdown in house price growth, but we are still in a strong market. All eyes are on whether this is a short-term boost due to the increased stamp duties in April.   

China

China’s manufacturing PMIs improved slightly once again, printing 50.2 and 50.8 and outperforming the 50 and 50.6, which was expected. Industrial production and retail sales also printed better than expected, recording a 5.9% and 4% growth respectively (vs. the 5% and 3.7% expectation). On the negative side, inflation was down 0.7% vs. the -0.4% expected. The consensus seems to be that the picture in China is improving and new have seen more inflows into Chinese stocks in recent weeks, however the pace appears to be very slow compared with previous recoveries and it doesn’t seem to have translated into an improved property market – which is very important for China’s economy.

Another month, another drop in China’s new home prices. February recorded a 4.8% decrease year-on-year, slightly better than the 5% drop we saw for January. This is the 20th consecutive month of price deprecations, but the softest pace since last June. The government keeps trying to tackle the problem, shifting to more localised measures such as easing restrictions for buying and providing more options for first-time buyers. Shanghai is the only main city that showed a price increase.

WANT MORE?

We’ll make it easy for you! Upgrade to Premium and gain an edge in the markets with industry-leading insights and analysis.

References

(n.d.). US Treasuries Yield Curve. US Treasuries Yield Curve. https://www.ustreasuryyieldcurve.com/

(n.d.). CME FedWatch Tool. CME Group. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

(n.d.).Trading Economics. Trading Economics. https://tradingeconomics.com/united-states/nahb-housing-market-index

(n.d.).Goldman Sachs. Goldman Sachs. https://www.goldmansachs.com/

(n.d.).Bloomberg. Bloomberg. https://www.bloomberg.com

(n.d.). FRED. Federal Reserve Economic Data. https://fred.stlouisfed.org/

Disclaimer  

Wizard of Soho LLC and Weekly Wizdom publish financial information based on research and opinion. We are not investment advisors, and we do not provide personalized, individualized, or tailored investment advice, nor do we provide legal advice or information. The publisher does not guarantee the accuracy of the information provided on this page. All statements and expressions present are based on the author's or paid advertiser's opinion and research. Directly or indirectly, no opinion is an offer or solicitation to buy or sell the securities or financial instruments mentioned.

As news is ever-changing, the opinions included should not be taken as specific advice on the merits of any investment decision. Investors should pursue their investigation and review of publicly available information to make decisions regarding the prospects of any company discussed. Any projections, market outlooks, or estimates herein are forward-looking and inherently unreliable. They are based on assumptions and should not be construed to be indicative of actual events that will occur.

Contrarily, other events that were not considered may occur and significantly affect the returns or performance of the securities discussed herein. The information provided is based on matters as they exist on the date of preparation and do not consider future dates. As a result, the publisher undertakes no obligation to correct, update, or revise the material in this document or provide any additional information. The publisher, its affiliates, and clients may currently or foreseeably have long or short positions in the securities of the companies mentioned herein. They may, therefore, profit from fluctuations in the trading price of the securities. There is, however, no guarantee that such persons will maintain these positions. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile, or any other means is illegal and punishable.

Neither the publisher nor its affiliates accept any liability for any direct or consequential loss arising from any use of the information contained herein. By using the website or any affiliated social media account, you consent and agree to this disclaimer and our terms of use.