Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

MORTGAGE JACK-IN-THE-BOX: RATES CRANK LOWER, DEMAND GOES 'BOING!'

The cost of financing home loans ticked a bit lower last week, prompting a 9.4% surge in mortgage demand, according to the Mortgage Bankers Association (MBA).

The average 30-year fixed contract rate USMG=ECI shaved off a mere 2 basis points to land at 6.77%, the coolest it's been since early April.

It's no coincidence that last week 10-year U.S. Treasury yields touched their lowest level since early May, as mortgages tend to track the benchmark rate.

That was enough to provoke a 9.4% jump in applications for loans to purchase homes USMGPI=ECI, considered among the most forward-looking housing indicators, while refi demand USMGR=ECI, which accounted for 40.0% of total mortgage activity, rose by 9.2%.

"After adjusting for the July 4th holiday, purchase applications increased to the highest level of activity since February 2023 and remained above year-ago levels,” writes Joel Kan, deputy chief economist at MBA. “Homebuyer demand is being fueled by increasing housing inventory and moderating home-price growth."

While the 30-year fixed rate has taken a roller coaster ride over the last 12 months, it is now 23 basis points below where it sat the same week a year ago.

Over that same time frame, purchase and refi demand have grown by 25.5% and 55.8%, respectively.

But as forward-looking as purchase applications are, all economic indicators are backward-looking.

For a look at where investors expect the sector to be six months to a year down the road, we turn to the stock market.

For much of the post-pandemic era, housing-related stocks - the S&P 1500 Homebuilding index .SPCOMHOME and the Philadelphia SE Housing index .HGX - handily outperformed the broader market.

But that relationship reversed in early November.

The SPCOMHOME is down 4.5% over the last 12 months, while the HGX index has eked out a 2.4% gain over the same time frame. The S&P 500 .SPX has advanced 11.6% from this time last year.

(Stephen Culp)

*****

EARLIER ON LIVE MARKETS:

U.S. STOCKS CLIMB AS NVIDIA BREAKS THE $4 TRILLION MARK CLICK HERE

BENCHMARK TREASURY YIELD WAITING FOR THE GAVEL TO FALL CLICK HERE

200% PHARMA TARIFFS: "RHETORIC" CLICK HERE

EUROPE BRACES FOR WORST EARNINGS IN FIVE QUARTERS CLICK HERE

BANKS DO THE HEAVY LIFTING; DAX, FTSE NEAR PEAKS CLICK HERE

EUROPE BEFORE THE BELL: TRADE DEAL AWAITED, FUTURES UP CLICK HERE

TRUMP TARIFF VOLLEYS MET WITH CAUTION, NOT CHAOS CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)