Weekly Market Commentary February 6th to February 10th 2023

Consumer credit rose $11.6 billion for the month of December, the lowest increase in nearly two years. The low rise reflects a step-back in credit card activity and other types of loans which one in three households reported using to meet spending needs. $7.2 billion of the increase was related to revolving credit which includes credit cards, and $4.4 billion was non-revolving credit such as school and vehicle loans. As consumers continue to bear the burden of inflation, and as the cost of borrowing increases through continued rate hikes, consumer credit will be worth monitoring to see if a material trend develops.

The MBA mortgage applications index rose 7.4% last week after falling 9% the week prior. Purchases were up 3.1% after falling 10.3% last week, and Refis increased 17.7% after falling 7.1%. The average 30-year fixed rate stayed about the same at 6.18%, at its lowest point since September.
Initial jobless claims rose 13,000 to 196,000 for last week, the first increase in the last six weeks. Although jobless claims rose, the figure remained under 200,000 for the fourth straight week, underscoring the tightness of the labor market.

The equity markets had a modest decline on the week, with the S&P 500 finishing at 4,090 down 1.1%, the Nasdaq at 11,724 down 2.4%, and the Dow Jones Industrials at 33,869 down 0.2%. The Nasdaq suffered its first weekly loss since December 27th, but only gave back a portion of the prior weeks’ gains. U.S. Treasury yields rose significantly this week, with the 2-year Treasury finishing at 4.35% and the 10-year at 3.75%.

Just as this week was light, next week will be equally as heavy. It starts on Tuesday with CPI inflation data, followed by Retail Sales on Wednesday, and PPI inflation on Thursday.