🔔 Opening Bell: New Home Sales Drop 13.7% in May

MarketsMeridian

Jun 25, 2025

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Headlines

New Home Sales Drop 13.7% in May as Mortgage Rates Near 7%

The U.S. housing market faced a setback in May 2025 as new single-family home sales plummeted 13.7% compared to April, reaching 623,000 units on a seasonally adjusted, annualized basis. This decline, reported by the U.S. Census, fell considerably short of Wall Street analysts' expectations of 695,000 units and remained below both the six-month average of 671,000 and the pre-pandemic average of 685,000 units in 2019.

The challenging market conditions were highlighted by Stuart Miller, co-CEO of Lennar, who noted, "The macro economy remains challenging, as mortgage interest rates have remained higher while consumer confidence has been challenged by a wide range of uncertainties, both domestic and global." The impact of high mortgage rates, which hovered around 7% throughout May, led to increased inventory levels, with a 9.8-month supply of new homes available for sale - a level not consistently seen since the 2009 Great Recession.

Source: CNBC

NATO Agrees to Higher Defence Spending Goal, Spain Says It Is Opting Out

NATO has agreed to raise its defense spending target to 5% of GDP, a significant jump from the previous 2% benchmark, largely in response to pressure from U.S. President Donald Trump and the growing threat posed by Russia. However, Spain has chosen to opt out of the new goal. Prime Minister Pedro Sanchez stated that meeting the 5% target would require unacceptable cuts to social spending or tax increases. Instead, Spain will aim to spend only 2.1% of GDP, claiming this fulfills its NATO obligations. The agreement, finalized just ahead of the NATO summit in The Hague, includes a compromise in language that allows flexibility for member nations, shifting from a collective "we commit" to a more ambiguous "allies commit."

Trump criticized Spain's position, calling the country "notorious" for its low defense spending and implying that nations failing to meet targets risk losing U.S. support. NATO Secretary-General Mark Rutte’s plan includes increasing core defense spending to 3.5% and adding 1.5% for strategic infrastructure and cyber readiness. While Spain remains the alliance’s lowest defense spender by GDP share, NATO officials remain skeptical that its proposed 2.1% spending will meet capability expectations. A revised deadline of 2035 has been set for reaching the new targets, with a midterm review in 2029.

Source: Reuters

US Intelligence Report Suggests US Strikes Only Set Back Iran's Nuclear Program by Months

A Defense Intelligence Agency assessment has contradicted claims by President Trump and Israeli PM Netanyahu about the complete destruction of Iran's nuclear facilities. The report indicates that while Sunday's strikes caused damage to sites at Fordo, Natanz and Isfahan, they only set back Iran's nuclear program by a few months. Key findings show that some highly enriched uranium was likely moved before the strikes, and many centrifuges remain intact. At the Fordo plant, despite the use of bunker-buster bombs, only the entrance collapsed while underground infrastructure survived. "It's treasonous so it ought to be investigated," said Trump special envoy Steve Witkoff regarding the leaked assessment, while the White House called the DIA report "flat-out wrong."

Source: Associated Press

Britain to Acquire F-35A Jets, Expanding Nuclear Capabilities

Britain has committed to purchasing 12 F-35A stealth fighter-bombers, marking a historic return to air-based nuclear weapons capability. This strategic move represents the largest enhancement of the UK's nuclear posture in a generation, adding a crucial second delivery system alongside their existing submarine-based Trident missiles.

The decision carries substantial implications for NATO's collective defense strategy, particularly in the European context. Downing Street's announcement includes Britain joining NATO's airborne nuclear mission, where allied aircraft will be equipped with American B61 bombs stored in Europe. This development strengthens the European pillar of NATO at a critical time when questions persist about American commitment to Europe's nuclear defense against potential Russian aggression. The UK will join seven other NATO members, including Germany and Italy, who maintain dual-capable aircraft for nuclear warhead deployment.

Source: The New York Times

Mortgage Rates and Demand Remain in Holding Pattern Despite Global Tensions

Despite the combination of economic uncertainty and international conflicts, mortgage rates have shown remarkable stability, maintaining a narrow range around 7% since early April. The average 30-year fixed mortgage rate saw a minimal increase to 6.88% from 6.84% last week, while purchase applications experienced a slight decline of 0.4%, according to the Mortgage Bankers Association's latest report.

Joel Kan, MBA's vice president and deputy chief economist, noted: "The combination of the ongoing conflict in the Middle East, current economic conditions, and last week's FOMC meeting resulted in slightly lower Treasury rates on average. However, mortgage rates still edged higher but remained in the same narrow range." The refinancing sector showed some activity, rising 3% for the week and standing 29% higher than the previous year, though this increase comes from historically low volumes. The average loan size for purchase applications has declined to $436,300, marking the lowest level since January 2025.

Source: CNBC

U.S. Treasury Yields Fall Despite Powell's Cautious Stance on Rate Cuts

Treasury yields experienced a downward trend on Tuesday, with the 10-year yield dropping 3.1 basis points to 4.291%, despite Federal Reserve Chair Jerome Powell's hawkish comments on monetary policy. The market movement came as traders monitored the delicate ceasefire situation between Iran and Israel, while also digesting Powell's latest remarks on the Fed's approach to interest rates.

Powell emphasized that "The FOMC's obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem." However, market analyst Andrew Brenner of NatAlliance offered a contrasting view, noting that "The markets are telling Powell that he will be lowering rates much more quickly than he portrayed today," highlighting the ongoing tension between Fed policy and market expectations.

Source: CNBC

France Says Tesla Lied About FSD and More, 4 Months to Comply or Be Fined

The French Ministry of Economy's DGCCRF division has issued a ruling against Tesla, identifying multiple violations of consumer protection laws. The investigation, which began in 2023, uncovered several deceptive business practices, including incomplete sales contracts, irregular delivery processes, and most notably, misleading claims about Tesla's Full Self-Driving (FSD) capabilities. The French authorities have given Tesla a four-month deadline to address these issues or face daily fines of 50,000 euros ($58,000 USD).

The investigation specifically highlighted Tesla's misrepresentation of its vehicles' autonomous driving capabilities. While Tesla sells "Capacité de conduite entirément autonome" (FSD) in France for 7,500 Euros, the system remains inactive in the country and, even in its active form in other markets, only qualifies as a Level 2 driver assist function rather than true autonomous driving. This ruling comes at a particularly challenging time for Tesla in France, where CEO Elon Musk's statement, "if you buy a Tesla today, I believe you are buying an appreciating asset – not a depreciating asset," has been scrutinized as part of the misleading claims about FSD's potential value and capabilities.

Source: Electrek

NATO Summit: North American and European Leaders Agree on 5% Defense Spending Target

In a significant development at the NATO summit, North American and European leaders have reached a consensus on increasing their defense spending target to 5% of GDP, marking a substantial shift in the alliance's military investment strategy. This new agreement represents a major escalation from the previous 2% target that has been in place since 2014.

The decision comes amid growing global security challenges and increasing geopolitical tensions, particularly in light of the ongoing conflict in Ukraine and evolving threats in the international arena. The move signals NATO's commitment to strengthening its collective defense capabilities and ensuring the alliance's readiness to respond to emerging security challenges in an increasingly complex global environment.

Source: Financial Times

Iran's Parliament Votes to Halt Co-operation with Nuclear Watchdog

The Iranian parliament has voted to cease cooperation with the International Atomic Energy Agency (IAEA), marking a critical moment in international nuclear oversight. This decisive move comes as a response to mounting international pressure and follows recent developments in the region's geopolitical landscape.

The decision represents a serious challenge to global nuclear monitoring efforts, potentially limiting international inspectors' access to Iranian nuclear facilities. Mohammad Eslami, head of Iran's atomic energy organization, emphasized that this move was a direct response to what Iran perceives as "political abuses" of the nuclear watchdog's mechanisms, highlighting the growing divide between Iran and international nuclear regulatory bodies.

Source: Financial Times

Tesla's European Car Sales Fall as Customers Switch to Chinese EVs

Tesla's European market presence continues to weaken as the company recorded its fifth consecutive month of declining sales in May, with a significant 27.9% year-over-year drop to 13,863 units. The company's market share in the EU, Britain, and European Free Trade Association regions has contracted to 1.2% from 1.8% in the previous year, reflecting growing challenges in the European market. This decline has been attributed partly to CEO Elon Musk's controversial political activities and public statements, which have impacted the brand's reputation.

The situation is further complicated by the rising influence of Chinese manufacturers in the European market, who have managed to double their market share to 5.9% despite EU tariffs on Chinese EVs. As noted by Felipe Munoz, global analyst at JATO Dynamics: "Despite the EU's imposition of tariffs on Chinese electric vehicles, its car brands continue to post strong growth across Europe. Their momentum is partly due to their decision to push alternative powertrains, such as plug-in hybrids and full hybrids, to the region."

Source: CNBC