COMMODITIES: Crude Extends Losses, Copper Rallies On Tariff Threat

• The below table is a summary of analysts reviewed by MNI ahead of Wednesday's BoC decision, unanimously expecting a 25bp cut to take the overnight rate target to 3.00%.  
• BoC-dated OIS rates have pushed lower recently but are still more hawkish than the median analyst, pricing a terminal between 2.6-2.7%.
• Please find the full MNI BoC Preview here. 

December's pickup in new home sales was larger than expected, reaching 698k (675k expected) on an seasonally-adjusted annualized rate basis, up from 674k in November (revised up from 664k). 

• That marked a 3-month high (and a 6.7% Y/Y gain), with inventories down to 8.5 months worth of sales (from 8.7 prior and a recent peak of 9.4). Median prices for single-family homes rose 2.1% Y/y ($427k, not seasonaly adjusted).
• As with the previous week's stronger-than-expected existing home sales report, this suggested a slight tightening in the housing market at end-year, albeit at subdued levels (especially for existing).
• Some of the improvement may have resulted from the pullback in mortgage rates in the summer, which started reversing  in September/October.
• New home sales have been relatively less afftected than those of existing homes, in part because of homebuilder-provided incentives to offset high mortgage costs for buyers.
• With inventories remaining relatively high by historic standards and mortgage rates rebounding, it's unclear how much further homebuilding activity has to pick up in coming quarters: the NAHB's sentiment index, a leading indicator of building permits acitivity, has stabilized since plummeting  in mid-2023 but remains below historic averages.

All analysts expect the FOMC to hold rates steady at the January meeting.

• Statement: Changes are seen being limited largely to the first paragraph describing current economic conditions. Most focus is on the labor market language, which – for those analysts who expect statement tweaks – could shift slightly to reflect some stabilization in conditions in recent months, vs previous easing.
• Forward guidance is expected to be unchanged.
• QT: The Fed is seen ending quantitative tightening (more specifically, for Treasuries, with MBS continuing to run off), at some point between March and September 2025 – consensus is for a mid-year (ie June) end.