June 24, 2023

Weekly Market Commentary June 19th to June 23rd 2023

US Housing starts surged the most since 2016, exceeding all expectations. New home construction jumped 21.7% to a 1.6 million annualized rate, beating the 1.4 million estimate. Building permits also increased during the month, rising by 5.2%, well above the 0.6% estimate. Meanwhile, Existing Home Sales only rose 0.2% in May to a 4.3 million pace, as the number of available homes was the lowest for any May since 1999. The data supports the theory that consumers are moving away from existing homes due to high mortgage rates and the lack of inventory.

MBA mortgage applications rose by 0.5% last week after rising 7.2% the week prior. The average rate on a 30-year fixed mortgage decreased by 4bps to 6.73%. Initial jobless claims held at 264,000 after last week’s number was upwardly revised to the same number. The recent upward trend in claims follows recent layoff announcements in tech and banking, as well as signs of a slowdown in demand for temporary workers.

S&P Global US manufacturing PMI came in at 46.3, lower than the expectation of 48.5 and deeper into contractionary territory. US Services PMI came in at 54.1, higher than the expectation of 53.5 and still in expansionary territory. As a whole, the composite PMI remained expansionary at 53.0 as business activity continued to be robust.

The equity markets saw their first weekly decline of the month after a strong start to June. The Dow Jones fell 1.7% to 33,727, the S&P 500 fell 1.4% to 4,348, and the Nasdaq was off 1.44% to 13,493, its first weekly decline in eight weeks. Yields were mixed as the 2-year treasury yield rose by 3bps to 4.75% while the 10-year treasury yield fell by 3bps to 3.74%, adding to the yield curve inversion which now stands at -101bps.

Next week we’ll get data on durable goods, new and pending home sales, and personal consumption.

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