CB LEI: Down 0.3% in February, Still Pointing to Risk of Recession 11th consecutive MoM decline

“The LEI for the US fell again in February, marking its eleventh consecutive monthly decline,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Negative or flat contributions from eight of the index’s ten components more than offset improving stock prices and a better-than-expected reading for residential building permits.

While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the US economy. The most recent financial turmoil in the US banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists. Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the US economy into recession in the near term.”

The 6-m m.a. has had a few false signals at much lower levels…

…but the 12-m m.a. is another indicator that has never failed since 1960.

“Mommy, is this data dependency?”

Amazon to Cut 9,000 More Jobs Amazon said it will cut 9,000 additional corporate jobs across units that include its cloud-computing and advertising businesses, a sign cost-cutting is extending into all aspects of its operations.

(…) “Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and head count,” Mr. Jassy said, noting that the layoffs come after Amazon completed its annual planning process.

The company previously said it was slashing 18,000 positions.

Waves of job cuts have roiled the tech industry. Amazon is the latest company to enact more job cuts than previously expected. Last week, Facebook parent Meta Platforms Inc. said it would cut roughly 10,000 jobs over the coming months, its second wave of mass layoffs. (…)

Since 2022, layoff tallies at tech companies have reached about 300,000 workers, according to Layoffs.fyi, a site tracking job cuts in the industry. (…)

Amazon Chief Executive Andy Jassy said in a message to employees on Monday that the company’s cloud, advertising and video-game-play streaming Twitch businesses would be the main target for the latest cuts. Advertising has been one of Amazon’s fastest-growing businesses and now generates nearly $38 billion a year in revenue for the company. And the Amazon Web Services cloud segment is twice as large while still growing at double-digit rates. It also now accounts for all of Amazon’s operating earnings after the company’s retail side lost nearly $12 billion last year. (…)

ONLINE SALES & GOODSFLATION (YoY)

• Job Listings Abound, but Many Are Fake In an uncertain economy, companies post ads for jobs they might not really be trying to fill

(…) In a survey of more than 1,000 hiring managers last summer, 27% reported having job postings up for more than four months. Among those who said they advertised job postings that they weren’t actively trying to fill, close to half said they kept the ads up to give the impression the company was growing, according to Clarify Capital, a small-business-loan provider behind the study. One-third of the managers who said they advertised jobs they weren’t trying to fill said they kept the listings up to placate overworked employees.

Other reasons for keeping jobs up, the hiring managers said: Stocking a pool of ready applicants if an employee quits, or just in case an “irresistible” candidate applied. (…)

“They’re posting jobs with the intention of hiring, but not anytime soon,” he says, adding that some companies posting jobs now might not be aiming to hire until the third or fourth quarter. (…)

“It’s better for you to hedge by leaving some of those job openings up,” she says. (…)

Companies might also be reluctant to take down ads, Mr. Garlock adds, because “we don’t want to signal we’re slowing down, so we’ll let these things ride.” (…)

Indeed says it has recently seen more employers dial back their recruiting efforts. Job postings on the site have fallen by 11% since the start of 2023. (…)

The chart plots the BLS job openings (through January) and Indeed job postings (through March 10). The dash line is openings pre-covid. Job openings seem set to drop 10% in February-March. If 20% of openings are ghost jobs, real openings are actually back to pre-pandemic levels, while the number of unemployed Americans is up 4%.

JOB OPENINGS

• Global Layoffs Extend Far Beyond Big Tech

(…) The carnage extends far beyond technology. Out of all the cuts where the share of jobs axed was reported or could be derived, the median tech layoff sent 10% of the company’s employees packing. In the communications, financials, health care, real estate and energy sectors, the median layoffs were as big or bigger, even though the total job losses were smaller. In health care, for example, the median reduction in workers was 20% across more than 120 layoffs, driven by massive cuts at small startups like Rubius Therapeutics Inc., which let go of more than 80% of its staff in November.

The consumer discretionary sector has eliminated over 108,000 roles, as demand falters and sales at outlets like Amazon fall short of expectations. Goldman Sachs Group Inc. and other big banks cut thousands of jobs despite glimmers of hope on Wall Street of a soft landing. (…)

Overall, the layoffs have been remarkably concentrated. Almost half of the job cuts were carried out by just two dozen companies, including big names like FedEx, Ikea and Philips.

@fkronawitter1

• Tens of thousands of jobs at risk after UBS takeover of Credit Suisse

A Not-So-Funny Thing Happened on the Way to the Terminal Rate The Fed’s next move and beyond.

(…) While it’s true that SVB was an outlier in terms of the mismatch between its highly run-prone funding base and longer-duration asset composition—and therefore its troubles were idiosyncratic—a close look at trends among FDIC-insured banks over the past 15 years shows that what happened at SVB is indicative of a system-wide phenomenon. The nearby charts show that from 2008 up until the pandemic, a moderate and steady stream of new deposits led to relatively small quarterly changes in securities holdings, while the Fed’s cautious post-crisis monetary policy regime helped to keep the change in unrealized losses (and gains) manageable.

But all that changed when the pandemic hit in 2020. In the first two years of the pandemic, banks got a massive influx of nearly $5.2 trillion dollars in new deposits, of which fewer than $2 trillion were FDIC insured. The unprecedented growth in deposits was no accident: it was the direct result of the coordinated fiscal-cum-monetary helicopter drop of liquidity.

So, what did banks do with this money? Loan demand was weak because the economy was still depressed, so loan and lease balances only rose by about $730 billion. With few lending opportunities, banks deposited $1.9 trillion in cash at the Federal Reserve, and used most of the rest of the deposit deluge to buy around $2.25 trillion in securities, 87 percent of which was U.S. Treasury or Agency MBS securities.

This, too, was no accident: bank liquidity regulations (e.g. Liquidity Coverage Ratio and liquidity stress testing) dictate that banks have to hold a high amount of high-quality liquid assets like cash or Treasurys or Agency mortgages. To say that buying these liquid, credit-risk free securities was welcomed by regulators would be an understatement. Initially these securities were held as available for sale but when Treasury yields bottomed in the summer of 2020, more were moved into the held to maturity bucket to shield them from negative marks.

The unrealized losses arrived in force when the Fed started to raise rates in March 2022 and the yield curve shifted up. Meanwhile, the Fed’s abrupt transition from quantitative easing to quantitative tightening caused bank deposit inflows to reverse, forcing some banks to seek more expensive sources of funding and reckon with large unrealized losses on their securities. With only $10 trillion out of $19.2 trillion in total bank deposits insured by the FDIC, depositors (and now regulators) are rightly concerned about what this all means.

With this context, we can see that the easing of terms on the Fed’s discount window and the creation of a new Bank Term Funding Program (BTFP) were not just a forceful response to the SVB bank run, but also a way to address possible similar scenarios that may play out across the banking system. The facilities will unlock access to substantially more liquidity for banks while shielding them from needing to take adverse marks on underwater bond positions (unrealized losses on securities positions of FDIC-insured banks totaled $620 billion as of Dec. 31).

Meanwhile, the weekend news of UBS’s takeover of Credit Suisse and the announcement of daily auctions through the Fed’s dollar swap lines with foreign central banks should help to calm fears of a wider global conflagration.

While these measures will buy time for banks and regulators to work through the problem, funding market stress will lead to tighter credit conditions for the economy. Loan rates, terms and underwriting standards are going to tighten for bank customers and bank profitability will take a hit, particularly for mid-size and small banks as they boost deposit rates and replace lost deposits with more expensive funding sources. For their part, regulators seem to be trying hard to avoid expanding FDIC coverage beyond the current $250,000 limit, but if conditions continue to deteriorate, they may be left with no other choice.

How does the Fed move forward on the policy front? Two weeks ago the Fed appeared to be teeing up a 50-basis point hike at this week’s meeting, but we think a move of that size is now off the table. Instead, we expect another quarter point hike, which is 75 percent priced in by the market. The European Central Bank decision to deliver a 50 basis point hike last week will also provide air cover, with Fed Chair Jerome Powell likely to note—as President Christine Lagarde did—that monetary policy tools will stay focused on monetary policy objectives, namely bringing inflation back to target.

At the same time, Chair Powell will reiterate that regulators have put in place a very robust liquidity backstop for banks, and they have confidence in the capital, asset quality and liquidity profile of the American banking system. The Fed’s messaging will likely draw a contrast between the conditions that led to the Global Financial Crisis (GFC) and today, highlighting tighter macroprudential oversight that has been put in place, but questions will rightfully be asked how, despite the lessons learned in the GFC, SVB and Signature Bank could collapse so suddenly.

The Fed will also have to acknowledge, however, that it still has more work to do on taming inflation and cooling off the labor market, which is why we think a quarter point hike is more likely than pausing. A pause (or even a premature cut in rates) runs the risk of signaling that the Fed is not serious about fighting inflation and could backfire if the market interprets it as a sign of even greater financial stability concerns.

For this reason, we expect the updated dot plot to convey a baseline path of several more quarter-point rate hikes in 2023. We expect Fed officials will pencil in additional 25 basis point hikes at the May and June meetings, which would bring the projected terminal rate to 5.5 percent. Whether the market believes this—or the Fed ultimately can deliver it—will largely depend on how wide the current banking crisis spreads. 

While we expect to see a lot of volatility in and around the next several Federal Open Market Committee meetings, we are also looking further down the road to the debt limit battle that looms this summer. Banking sector problems have created a political opportunity for even more finger pointing and blame shifting, and some lawmakers seem prepared to test the Treasury-Fed backup plan to prioritize debt service payments to avoid a default on the national debt.

Despite all this political brinksmanship, eventually we will get a debt limit resolution, and what comes next may be just as important for the banking system. That’s because Treasury will need to issue hundreds of billions of dollars in T-bills to replenish its depleted cash balance, which is currently being run down because Treasury has exhausted its legal borrowing authority.

As Treasury’s cash balance ramps up by a half trillion dollars or more this fall, some liquidity will likely be drained out of the banking system as well as the Fed’s Overnight Reverse Repo Facility. This could further disrupt banks, but regulators believe that the BTFP, discount window, and the Federal Home Loan Bank System will be there to provide a liquidity backstop.

Regulators are committed to protecting the banking system, but other weaknesses will continue to be revealed as quantitative tightening proceeds. The Fed’s battle against inflation has gotten harder and lonelier as the sharp rise in interest rates has started to bite. Nevertheless, this is a battle it has pledged to win, even if there is collateral damage.

We continue to anticipate a recession starting as early as midyear, and the economic slowdown will ultimately help the Fed achieve its inflation-fighting goals. As all of this plays out, investors will be well served by being appropriately vigilant in their security selection, duration positioning, and asset allocation decisions. To that end, the events of the past week have shown that investment-grade fixed income can outperform equities, consistent with our expectation that fixed income will rebound and a negative stock-bond correlation will reappear in 2023.

Fund Managers’ Biggest Fear Is Now a Systemic Credit Crunch It’s replaced stubborn inflation as the key risk for increasingly pessimistic investors, according to a BofA survey.

The most likely source of a credit event is US shadow banking, followed by US corporate debt and developed-market real estate, according to the poll, which canvassed 212 fund managers with $548 billion under management. A credit event was chosen by 31% of participants as the biggest threat. (…)

Moreover, the poll showed investor sentiment is “close to levels of pessimism seen at lows of past 20 years,” wrote Hartnett, who was correctly bearish through last year, warning that recession fears would fuel a stock exodus. Fund manager survey positioning and sentiment is “the only key measures in ‘capitulation’ territory so far.” (…)

The likelihood of a recession is rising again for the first time since November, with BofA’s survey showing a net 42% of participants expecting a slowdown over the next 12 months. Meanwhile, expectations for stagflation have remained above 80% for 10 months in a row. In the survey’s history, “investors have never held such strong conviction about the economic outlook,” Hartnett wrote. (…)

UBS Agrees to Buy Credit Suisse for More Than $3 Billion Deal is part of effort to prevent further erosion of confidence in banking system

(…) pushed into the biggest banking deal in years by regulators eager to halt a dangerous decline in confidence in the global banking system.

The deal between the twin pillars of Swiss finance is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators.

The Swiss government said it would provide more than $9 billion to backstop some losses that UBS may incur by taking over Credit Suisse. The Swiss National Bank also provided more than $100 billion of liquidity to UBS to help facilitate the deal. (…)

The bank faced as much as $10 billion in customer outflows a day last week, according to a person familiar with the matter. (…) “The acceleration of the loss of trust and the worsening of the last few days made it clear that Credit Suisse cannot continue to exist in its current form,” he said.

Regulators also worried that Credit Suisse’s failure could make Switzerland a new source of contagion for global stress. Hours after the UBS deal, a group of central banks, including the Federal Reserve and the Swiss National Bank, announced an expanded dollar swap line, a type of international lending operation. They called the expansion “an important liquidity backstop to ease strains in global funding markets.” (…)

A forced marriage of the two titans of Swiss banking was something UBS had never wanted. Credit Suisse had a laundry list of scandals and problems. Its big investment bank was the opposite of the “capital light” model UBS had been fashioning for years—one built around earning fees for managing the finances of rich clients.

But other parts of it were attractive: It is UBS’s chief rival in the local Swiss banking system. A merger of the two in other times might have seemed like an impossibly monopolistic combination. The Swiss authorities granted UBS a waiver.

And Credit Suisse has a cache of rich wealth-management clients in Asia that dovetails with UBS’s similar business and ambitions there. (…)

An earlier UBS proposal to pay around 1 billion Swiss francs, or around $1.1 billion, was eventually lifted to 3 billion francs, paid in UBS shares. Still, that is less than half of Credit Suisse’s last traded market value on Friday.

Also bearing big losses will be holders of $17 billion worth of Credit Suisse “additional tier 1” bonds, which are securities that look like bonds of a bank until the bank gets in financial trouble, at which point they become worthless. (…)

An end to Credit Suisse’s nearly 167-year run marks one of the most significant moments in the banking world since the last financial crisis. (…)

Unlike Silicon Valley Bank, whose business was concentrated in a single geographic area and industry, Credit Suisse is a global player despite recent efforts to reduce its sprawl and curb riskier activities such as lending to hedge funds. (…)

After swallowing Credit Suisse, UBS’s balance sheet will rival Goldman Sachs Group Inc. and Deutsche Bank AG in asset size. (…)

• And Now, a Credit Suisse Bailout The weekend shotgun marriage with UBS shows how post-2008 regulation failed again.

(…)In the biggest insult to the market, regulators will allow this deal to proceed without a vote of either bank’s shareholders. (…)

As for UBS shareholders, they’re now being punished for the discipline they imposed over the years to turn UBS into a healthy bank by being saddled with managing a failed rival. They also face more regulatory scrutiny and compliance costs now that their bank has grown far bigger. Congrats.

Authorities justify all this by highlighting the systemic risk in Switzerland and beyond of allowing Credit Suisse to collapse into bankruptcy. That danger is debatable. Credit Suisse was an outlier even in a week that saw bank stocks sell off around the world, meaning investors may have seen limited contagion risk. A European Central Bank official Thursday said no eurozone bank was imperiled by Credit Suisse’s travails, and media reports suggested counterparties were taking steps to limit their exposure.

Wasn’t eliminating the systemic risk posed by larger banks the point of beefed up regulation after the last panic? Credit Suisse boasted healthy capital-adequacy and liquidity ratios under post-2008 banking rules, and it had completed or was in the process of preparing “living wills” with regulators around the world to manage an insolvency. Those plans didn’t contemplate a forced sale to an unwilling rival, yet that’s the fix officials reached for in the pinch—as they always do, with ample taxpayer cash to sweeten the deal.

This weekend’s rescue is a warning that two weeks into the current banking panic the post-2008 rule book already has failed. Taxpayers are on notice that the solution to any crisis will be to amplify too-big-to-fail rather than reducing it—as it was the last time around. Hang onto your wallets.

• First Republic Set to Extend Record Loss as S&P Downgrades Again
• French insurer AXA has about $640 mln exposure to Credit Suisse
• Credit Suisse Bond-Wipeout Threatens $250 Billion Market Deal would write down more than $17 billion of the bank’s riskiest bonds

AT1 bonds—also known as contingent convertible bonds, or CoCos—were introduced after the financial crisis as a way to transfer banking risk away from taxpayers and onto bondholders. They also became a popular investment product that money managers and banks, including Credit Suisse, marketed to clients as a relatively safe way to boost yield on bond portfolios.

“What’s shocking is that it looks like equity holders will recover better than tier 1 bondholders,” said Justin D’Ercole, co-founder of ISO-mts Capital Management LP, a fund focused on bank securities. The resulting losses will likely prompt individual and institutional investors to sell similar securities of other European banks, he said. (…)

There are about $254 billion AT1 bonds outstanding and the securities are often banks’ most actively traded bonds because of their large size, according to data from Lazard Frères Gestion. (…)

Holders of CoCo bonds in Spain’s Banco Popular Español SA got wiped out in 2017 when the bank got bailed out through a merger with Banco Santander SA. (…)

The complete write-off by Credit Suisse, one of the largest issuers in the AT1 market, will likely hurt investor appetite for the bonds, fund managers said. It will also squeeze lending by banks, they said.

Ultimately, AT1 bonds will become more expensive for banks to issue, reducing their ability to make new loans, Mr. D’Ercole said. “That means banks will likely have to run smaller balance sheets,” he said.

Banking Mess Raises Recession Risks Main Street businesses and American families are likely to find it harder to get a loan because of turmoil in the banking industry, denting economic growth.

(…) Smaller banks are crucial drivers of credit growth, the fuel that powers the economy. Banks smaller than the top 25 largest account for around 38% of all outstanding loans, according to Federal Reserve data. They account for 67% of commercial real estate lending. (…)

Smaller banks are likely to respond by tightening standards and slowing lending to raise capital ratios, said Torsten Slok, chief economist at Apollo Global Management Inc., a private-equity firm. He said those moves would brace against the risks of more fickle depositors and volatile funding costs. (…)

Banks had begun tightening lending standards at the end of last year, as the sharp rise in interest rates made it harder to find creditworthy borrowers, and demand for commercial loans weakened, according to a Fed survey of senior loan officers. (…)

“There’s a pretty strong correlation between lending standards and unemployment,” he said.

Maybe not directly with unemployment but certainly on credit…

  

…and thus on the economy…

@MichaelKantro

…back to the credit markets…

…at a rather inopportune moment, particularly for regional banks where CRE loans = 20% of assets (vs 7% for larger banks):

@SpecialSitsNews

@3F_Research

• “In 2008, there were asset problems,” said [former Goldman Sachs CEO Lloyd] Blankfein. “In the current market, it’s really people pulling out their deposits but the assets are, probably in the long run, money good.”

Unless we get a hard landing.

• Mike O’Rourke of JonesTrading (quoted by John Authers):

The prime concern of every bank for the immediate future is preventing deposit flight. It should be clear that the most expedient and effective solution to this crisis is an expansion and modernization of the FDIC deposit insurance regime. It has become vastly apparent that the banking industry and its regulators were not prepared for a banking crisis in the instantaneous information era. This is an era where the network effect of social media carries information and misinformation to hundreds of millions if not billions at the click of a button. Another click of a button allows depositors to instantaneously move funds.

• Easy to see why there is an exodus of commercial bank deposits – Bloomberg TV Charts

@TopdownCharts

FOMC WEEK

• Goldman Sachs:

We expect the FOMC to pause at its March meeting this week because of stress in the banking system. While policymakers have responded aggressively to shore up the financial system, markets appear to be less than fully convinced that efforts to support small and midsize banks will prove sufficient. We think Fed officials will therefore share our view that stress in the banking system remains the most immediate concern for now.

This would mean taking a pause in the inflation fight, but that should not be such a problem. Bringing inflation back to 2% is a medium-term goal, which the FOMC expects to solve only gradually over the next two years. The inflation problem actually looks less urgent now than last summer because near-term inflation expectations have fallen sharply and long-term inflation expectations have remained anchored. Moreover, the link between a single 25bp rate hike and future inflation is very tenuous, the FOMC can get back on track quickly if appropriate, and the banking stress could have disinflationary effects.

In our central case, tighter lending standards resulting from the banking stress subtract ¼-½pp from GDP growth in 2023, equivalent to the impact of 25-50bp of tightening in our financial conditions index or 25-50bp of Fed rate hikes. The estimated impact is relatively moderate in part because lending standards had already tightened sharply in prior quarters due to widespread recession fears and in part because the multiplier effect should be low in an economy with excess demand for workers. However, the risks are tilted toward a larger effect and the uncertainty will likely linger for a while.

• MS bank analysts see a meaningful increase in funding costs ahead, which will lead to tighter lending standards, slower loan growth, and wider loan spreads. Ellen Zentner believes this raises the risk that a soft landing turns into a harder one.
• APOLLO: “Quantifying the impact of tighter financial conditions plus tighter lending standards, we estimate that the events this past week correspond to a 1.5% increase in the Fed funds rate.” [Slok]

@carlquintanilla

• Case for Fed Pause Builds After Crisis-Echoing Move on Swaps

(…) On Sunday afternoon, however, the Fed and five other central banks announced action to boost liquidity in US dollar swap arrangements by increasing the frequency of access to daily from weekly — echoing actions taken during other moments of crisis.

While US stock futures and Treasury yields climbed in the initial hours of trading following Sunday’s news, and investors increased bets on a quarter-point hike, several analysts said the risk-benefit calculations around a pause were becoming more favorable to such an option.

“The fact that you are engaged in global coordination with other central banking authorities to rescue institutions and keep liquidity flowing, it just suggests that a pause is probably a better risk/reward,” said Julia Coronado, president of MacroPolicy Perspectives LLC and a former Fed economist. (…)

“The higher risk of pausing also suggests higher risk that the FOMC would revise downward or suspend balance sheet runoff, especially if policymakers think recent stress sends a definitive signal of reserve scarcity at the aggregate, systemic level rather than only at the level of individual banks,” they [Monetary Policy Analytics] wrote. (…)

The Fed easing + credit tightening regime has been the weakest environment for equities.

BofA Quant (The Market Ear)

China Frees Up Liquidity in Sign of Wariness About Recovery The People’s Bank of China said it would cut the amount of cash banks must set aside as reserves, in a new push to stimulate growth and restore business confidence.

(…) The move wasn’t widely expected by economists, arriving days after official data showed China’s recovery broadly to be largely on track during the first two months of the year, led by strong consumption, while new home prices in major Chinese cities rose in February for the first time in more than a year. (…

At a press briefing Monday, China’s new premier, Li Qiang, acknowledged that achieving even 5% growth wouldn’t be easy this year, in part because of uncertainty in the global economic outlook. (…)

• Chinese Developer Evergrande Nears Landmark Restructuring Deal China Evergrande Group, the property giant that defaulted on its U.S. dollar bonds more than a year ago, is close to striking a debt-restructuring deal with foreign bond investors.

The Guangzhou-based developer, the most indebted property company in the world, has agreed on the outlines of a deal that would give it breathing room by extending its debt maturities while allowing it to defer some coupon payments, the people said.  (…)

Evergrande won’t pay investors back immediately but will swap their bonds for several newly issued ones, including bonds secured by shares of its Hong Kong-listed businesses such as its property-services arm and its electric-vehicle division.

Investors would also be offered new unsecured bonds with maturities as long as 12 years in the future, paying coupons as high as 9%, the people said. Evergrande would be able to give investors more bonds instead of making these coupon payments, the people said, meaning it won’t suffer the burden of paying interest immediately after a deal is signed. (…)

A $4.68 billion bond due in 2025 was bid at 8 cents on the dollar on Friday afternoon in Hong Kong, according to Tradeweb. (…)

• China’s Housing Prices Show Signs of Stabilizing Continued policy-easing signals and an end to Covid restrictions have put a floor under the sector

New home prices in 70 large Chinese cities rose 0.29% in February from the prior month, according to the calculations by The Wall Street Journal based on data released Thursday by the National Bureau of Statistics.

The gain represents the first month-on-month increase since August 2021 and suggests Beijing’s efforts to support the beleaguered sector are starting to take effect. (…)

Official data released Wednesday showed Chinese home sales rising 3.5% by value in the combined January-February period from a year earlier, compared with a 28.3% year-over-year drop for the full year of 2022. (…)

New construction starts by China’s property developers fell 9.4% on year in January and February, compared with a 39.4% fall recorded for the entire prior year.

The official data released Thursday showed that just 13 of the 70 cities tracked by authorities saw month-on-month home-price declines in February, a sharp decline from January’s 33 cities.

When compared with a year earlier, average new home prices in the 70 surveyed cities fell 1.86% in February, narrowing from January’s 2.26% year-over-year drop. In year-over-year terms, 54 of the 70 cities saw new home price declines in February, roughly the same as January’s 55 cities, the data showed.