June 25, 2022

Weekly Market Commentary June 20th to June 24th 2022

Overall, it was a light week of economic data releases, with investors’ turning their attention to Federal Reserve Chairman Jerome Powell’s two-day Semiannual Monetary Policy Report to Congress.

Leading off the holiday shortened week on Tuesday was the Chicago Fed National Activity Index, which is a weighted average of 85 broad-based indicators of growth with a reading above zero indicating above trend growth, while a negative reading indicates below trend growth. May’s reading registered a 0.01, missing the estimate of 0.47 and below the prior months reading of 0.40, indicating that growth has slowed toward the trend rate.

Existing home sales declined by 3.4% in May, to a seasonally adjusted sales pace of 5.4 million homes, down 8.6% from a year ago. Inventory at the end of the month increased to 1.16 million, down 4.1% from a year ago. Median prices rose for the 123rd consecutive month by 14.8% to $407,600. Increased rates and elevated home prices will likely slow the pace of transactions in 2022.

The S&P Global Composite (service and manufacturing) survey declined to 51.2 from 53.6, compared to analysts’ estimate of 53.7 indicative of a moderate level of expansion, but similarly to the Chicago Fed report, showed that growth is slowing at a faster rate than anticipated.

Friday brought additional housing data with new single-family homes sales increasing 10.7% to an annualized 696,000 pace and the first gain this year. However, homebuilder sentiment recently slid to a two-year low in June amid rising concerns of higher mortgage rates and inflation,

After posting three straight losing weeks, stocks regained some footing during the week as positive momentum and returns increased throughout the week with the S&P 500 jumping 2.4% on Friday and 5% for the week as Wall Street looked to grind out a rare positive week in what has been a rough first half of the year, now down 17.9% on the year.

The yield on the 10-Year U.S. Treasury closed the week at 3.13%, down from 3.30% and well-below the 3.48% reached on June 14th, which was the highest level in over a decade. This was attributable to Fed Chairman Jerome Powell’s statements that acknowledged potential challenges to monetary tightening policies.

Next week, is loaded with key economic releases include the third reading of 1Q22 GDP, durable goods orders, inflation, and manufacturing data.

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