August 27, 2021

Weekly Market Commentary August 23rd to August 27th 2021

Existing Home Sales of 5.99 million (annualized) topped expectations and exceeded the prior monthly reading. The inventory of homes for sale increased marginally to 2.6 months of supply. The median price dipped 0.8% from June, a welcomed change for buyers following rapid monthly price increases, although prices remain 18% higher than July of 2020. New Home Sales were only modestly higher than the prior month and in line with expectations. Supply of new homes on the market reached a more normal 6.3 months of supply.

Orders for Durable Goods pulled back -0.1% in July. A decline from the prior month 0.8% reading, but modestly ahead of consensus expectations. A -2.2% decline in transportation orders was a key laggard. Ex-transportation, new orders rose 0.7%, modestly exceeding the revised prior month reading and expectations.

The 2nd estimate of Q2 GDP was revised up to 6.6%. Personal Consumption remained the key driver of the stellar growth reading, higher by a revised 11.9%

Initial Jobless Claims ticked up to 353k. Factoring in more favorable figures from the prior weeks, the 4-week moving average reached a pandemic low of 366k.

Personal Income increased by 1.1% in July, ahead of expectations, driven by wage increases, particularly within the services sectors. The rise comes amid a 12% decline in unemployment benefit payouts in the month. Personal Consumption Expenditures (PCE) advanced by 0.3% in the month and 4.2% on a year-on-year basis. The annualized Core reading (excluding food and energy) was in line with expectations at 3.6%, but still ahead of the Fed’s long-term target.

The S&P 500 recovered with a solid 1.5% gain this week, closing at a new record high of 4,509. The NASDAQ had an even stronger 2.8% advance, breaking through another milestone to close at 15,129. The 10-Year U.S. Treasury climbed 5 basis points to 1.31%. on further talks of Fed bond purchase tapering at the Jackson Hole Economic Symposium held on Friday.

Key economic releases next week include Consumer Confidence, ISM Manufacturing, Factory Orders and monthly Employment figures.