Read the highlights of this week’s commentary from Helios:
- In a historic shift, the US federal government now spends more on national debt interest payments than defense spending. For the first seven months of fiscal year 2024, interest payments totaled $514 billion, $20 billion more than defense spending. This marks 2024 as the first year where interest payments are projected to surpass national defense expenditures.
- US business activity surged in early May at the fastest pace in two years, driven by stronger growth in the service sector and increased inflation. The S&P Global flash May composite purchasing managers index (PMI) rose to 54.4 from 51.3, the highest level since April 2022. This suggests a notable acceleration in overall activity despite weak April retail sales and a drop in factory output. Additionally, the S&P Global composite measure of input prices rose to the second-highest level since September, with prices charged also increasing.
- US existing home sales fell 1.9% in April to an annualized rate of 4.14 million, marking the second consecutive month of decline. The median selling price reached a record $407,600, up 5.7% from last year. Despite mortgage rates dropping to 6.94% for a 30-year fixed loan, high prices and borrowing costs are still hampering market recovery, with sales of both new and previously owned homes declining in April.
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