Weekly Market Commentary April 24th to April 28th 2023

The week started with New Home Sales for March coming in much hotter than expected at 683,000 when 630,000 was projected. The previous month’s revision to 623,000 meant the increase was 9.6% higher than in February. It could be a sign that the doom and gloom evident in the real estate market could be changing, but it also could just be a one-off month in this volatile sector. Durable Goods was also a win at +3.2% when consensus called for +0.8%. Stripping out transportation and the result was a tamer +0.3%, still better than the anticipated -0.20%. Initial Jobless claims, the frontline barometer for the employment situation, was next and it came in at a steady 230,000 when closer to 250,000 was expected. This number should slowly rise as the Fed continues to put the brakes on the economy by raising interest rates.

The big release of the week was first quarter GDP which came in much lower than expected at +1.1%. Digging a little deeper showed that the inventories component was the biggest detriment, so markets took this surprise in stride. Friday finished the week with Personal Income (+0.30%) and Personal Spending (flat) both beating estimates. In all important inflation news, the PCE Core Deflator for March (+4.6%) dropped slightly from February’s revised +4.7% leading economists to be all but convinced the Fed will raise rates at least one more time at their early-May meeting.

The equity markets kept chugging right along with all three major stock indices up for the week. The S&P 500 closed up just under 1% ending the week at 4,169; the Dow Jones Industrials finished at 34,098, also up slightly under 1%; and the Nasdaq closed up 1.3% at 12,226. US Treasuries rallied across the curve with the 2-year finishing at 4.02%, the 10-year at 3.43%, and the 30-year at 3.68%.

Next week’s important economic data includes the Fed’s May meeting announcement, the ISM Services and Manufacturing indices, and the U.S. Employment report for April.