April 27, 2024

Weekly Market Commentary April 22nd to April 26th 2024

March New Home Sales started off an important week of economic data, and handily beat estimates. Sales increased by 8.8%, well above the estimate of 0.9% and February’s decrease of 5.1%. New housing inventory sits at 477,000, and at the current sales pace would take 8.3 months to clear the supply. Increasing new home supply has resulted in some cost relief, with the median new house price coming in at $430,700, down 1.9% from a year ago.

The preliminary Durable Goods reading for March was 0.2%, at estimate and slightly above the prior month’s increase of 0.1%. Capital Goods orders excluding aircraft and defense (a proxy for business investment) increased 0.2% in March after a 0.4% increase in the previous month.
The preliminary estimate for 1Q24 GDP was 1.6%, well below the estimate of 2.5%. The primary driver for the miss was weaker consumer spending, which increased by 2.5% and was below the estimate of 3.0%. Higher inflation in the quarter was a factor on slower spending.

The most anticipated data closed out the week, with the Core Personal Consumption Expenditures (PCE) Index coming in at estimate at 0.5% for the month, while the year-over-year figure increased by 0.1% to 2.7%. Personal Income came in as expected at 0.5% while Personal Consumption increased by 0.8%, ahead of the estimate and matching the prior month’s reading of 0.8%. The warmer inflation reading increased the likelihood of “higher for longer” rates.

After coming off five consecutive daily declines the S&P 500 posted its best week since November, closing at 5,099 and driven by favorable earnings data during the week to a 2.7% gain. The Nasdaq Composite recovered by a stellar 4.2%.

In the fixed income market, U.S. Treasuries were mostly unchanged for the week. The 2-Year U.S. Treasury yield was unchanged at 5.00%, while the 10-Year increased slightly to 4.66%. This 2-10 Treasury spread stands at -34bps.

Key economic releases next week include ISM manufacturing and services data, Factory Orders, and most importantly Unemployment and Payroll data.

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