Pending Home Sales Miss Expectations, SP500 Tests Session Highs

Key Insights

• Pending Home Sales decreased by 5.2% in March. 
• Traders expect that Fed will raise the federal funds rate to 500 – 525 bps at the next meeting. 
• U.S. dollar pulled back from session highs.

Traders Expect A 25 Bps Hike At The Upcoming Fed Meeting

On April 27, U.S. reported that Pending Home Sales declined by 5.2% month-over-month in March, compared to analyst consensus of +0.5%. On a year-over-year basis, Pending Home Sales were down by 23.2%, which is not surprising as the Fed raised rates aggressively.

FedWatch Tool indicates that there is a 84.8% probability of a 25 bps rate hike at the next meeting. Traders expect that Fed will continue to raise rates despite problems in the regional banks sector. The federal funds rate is expected to decline from the peak of 500 – 525 bps to 450 – 475 bps by the end of the year.

SP500 Tries To Climb Above 4100

SP500 moved towards the 4100 level after the release of the Pending Home Sales report. Traders believe that the disappointing economic data may force the Fed to be more dovish at the upcoming meeting, which will be bullish for stocks.

U.S. Dollar Index settled near the 101.50 level after touching highs near 101.80. A less hawkish Fed is bearish for the American currency. However, it should be noted that Treasury yields are moving higher, which may provide some support to the U.S. dollar.

Gold continues to trade near the $1980 level. Higher Treasury yields are bearish for gold markets.

For a look at all of today’s economic events, check out our economic calendar.