Today the National Association of Realtors reported that sales of existing homes rose by 1.4 percent between April and May. Today's report revised the April sales number to unchanged from a previous estimate of up 0.5 percent.

At first glance, the used home sales numbers for May might seem to be at odds with the recently-reported drop off in new home starts and building permits, and with the National Association of Home Builders' reported drop off in prospective buyer traffic at building sites. But, this is not the case. We're talking here about existing homes rather than new homes, and the existing home sales that were consummated in May were based on purchase contracts that were written in earlier months. So, we should expect that the relative slowness in home sales brought on by higher interest rates will be reflected in existing home sales in the coming months.

In other news today, the Conference Board reported that its index of consumer confidence dropped a whopping 5.9 points, from 103.5 to 97.6 from May to June.

Respondents to the monthly survey of 5000 households were particularly concerned about their present economic situation. Their assessment of their current situation dropped by 9 points from May to June. The percentage of respondents who thought that business conditions were good declined, and the percentage who thought that jobs were hard to get increased.

Looking six months into the future, more respondents felt that business conditions would worsen, more felt that fewer jobs would become available, and fewer believed that their incomes would increase.

This month's reading is down 7.2 points from the recent high reading of 104.8 set in April; but, it is also significantly higher (9.2 points) than the low of 88.4 set in January. A board spokesperson said that this month's reading suggests continuing modest growth in the economy.

The Conference Board's consumer confidence index fell from 103.5 to 97.6 from May to June. During that same period the University of Michigan's consumer sentiment index rose from 89.4 to 93.8. Because the results of these two surveys sometimes go in opposite directions, I always calculate the average of the two to create a sort-of composite index of consumer feeling. For June this composite index was at 95.7, down from a 96.5 reading in May and an April value of 99.0 -- a thirteen-month high.

It looks like the bond market regarded today's economic news as evidence that inflation was under control. The 30-year T-bond gained 11/32 this morning and held on for a gain of 13/32 right after this afternoon's stock market close. In the past two weeks the yield on the 30-year bond dropped from 7.18 percent to 7.05 percent. Stocks languished in slightly-negative territory throughout the day and then came back to log a gain of1.48 in the DJIA just as the market was closing.

Byline: Lafferty (MF Merlin)