Weekly Market Commentary December 18th to December 22nd 2023

Housing Starts surged 14.8% to a six- month high in November as mortgage rates fell. The annualized rate of 1.56 million units was well ahead of the 1.36 million estimate as homebuilders are adjusting for permanently higher housing demand than before the pandemic. Single family housing starts increased 18% and accounted for most of the activity. Building Permits slid 2.2% from the prior month to 1.46 million, missing estimates of 1.48 million. Permits for single family houses reached an 18-month high while lending on new construction has been one of the bright spots in an otherwise slow year of purchase originations.

The third and final reading of GDP was revised lower to 4.9% from 5.2%. Slower consumer services growth was a primary factor for the decrease. Economists believe this could serve as the high-water mark moving into the next year as higher interest rates will hinder growth in 2024.

The Fed’s preferred gauge for inflation, Core Personal Consumption Expenditures (PCE), was released on Friday and came in below expectations. The Index, which excludes both food and energy prices, increased 3.2% from a year ago, below the 3.3% surveyed by economists. Services inflation continued to outpace goods inflation as services increased 0.2% while goods slumped -0.7%. This marks yet another month of progress toward the Fed’s 2.0% goal.

Overall, the markets experienced a relatively quiet week despite the small blip on Wednesday. This week marks the 8th straight winning week for all major equity markets. The S&P 500 finished at 4,755, up 0.3% and the longest weekly winning streak since 2017. Dow Jones Industrials finished up 0.2% at 37,385, while the Nasdaq finished in the green by 0.6% at 14,993. In fixed income markets, the 10 -Year U.S. Treasury was down 0.02% to 3.89% on the week.

Next week’s calendar is very light with Christmas being the only noteworthy event, along with some regional manufacturing reports. Happy Holidays everyone!