Weekly Market Commentary March 21st to March 25th 2022
New Home Sales disappointed this week declining -2% in February. Pending Home Sales followed suit declining -4.1% when analysts were expecting a 0.9% rise. Rising mortgage rates are the likely culprit in the recent dip of these readings, however with fewer qualified buyers in the market, those looking to purchase have seen improvement in their power to negotiate on price.
In a preliminary version of the Markit Manufacturing PMI survey, activity rose to 58.5 in March compared to 57.3 in February. Services were also stronger in March with a reading of 58.9 versus last month’s 56.5. The Composite PMI measure rose to 58.5 from February’s 55.9.
Durable Goods Orders fell -2.2% in February, a much bigger drop than expected. Nondefense Capital Goods Ex-Aircraft, which strips out more volatile components of the reading, fell -0.3%. While orders are still elevated, this was the first decline for this reading in a year. Keep in mind one month of data is not concerning but this is something we will keep an eye on.
Thursday’s Initial Jobless Claims report bolstered the Fed’s view that labor supply vs demand is too strong, thus confirming the need for stimulus withdrawal. Claims fell by 28,000 to 187,000, much lower than expected. The 4-week average is now 211,750.
Equity markets finished positive for the week. The Dow Jones Industrials finished up 0.3%; the S&P 500 was up 1.8%; and the Nasdaq beat both by finishing up 2%. In fixed income markets, yields continued to climb. The 2-year, 5-year, and 10-year US Treasuries finished at 2.30%, 2.55%, and 2.48% respectively, inverting the intermediate part of the yield curve.
Next week’s economic focus will be heavily on Employment data and GDP.