April 1, 2024

Weekly Market Commentary March 25th to March 29th 2024

Despite a shortened trading week in observance of Good Friday, there was plenty of economic data to digest.  New Home Sales started off the week, unexpectedly declining in February following strong housing data reported last week.  Sales declined by 0.3%, below the estimate of 2.3% and January’s increase of 1.7%.  New housing inventory sits at 463,000, the most since November 2022 and at February’s sales pace would take 8.4 months to clear the supply.  Increasing supply has resulted in some cost relief, with the median new house price coming in at $400,500, down 7.6% from a year ago and the lowest since June 2021. 

The preliminary Durable Goods reading for February was 1.4%, above the 1.0% estimate and well-above the prior month’s decline of 6.9%.  Capital Goods orders excluding aircraft and defense (a proxy for business investment) increased 0.7% in February and the largest monthly gain since November.  Year-over-year business investment increased 0.6%, a two-month high.

The third estimate of 4Q23 GDP was revised higher to 3.4%, from 3.2%.  The primary driver for the revisions were increases to both consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment.

The most anticipated data closed out the week, with the Personal Consumption Expenditures (PCE) Index coming in a tenth below estimate at 0.3% for the month, while the year-over-year figure dropped to 2.5%.  Personal Income came in a tenth lower than expected at 0.3% while Personal Consumption increased by 0.8%, ahead of the estimate and considerably above the prior month’s print of 0.2%.  The cooler inflation reading aligns with the standing expectation that the Fed will begin cutting rates in June. 

The S&P 500 opened the week fresh off another all-time high with back-to-back declines to start the week but closed once again in positive territory and another all-time high at 5,254 and up 10.2% YTD. In the fixed income market, U.S. Treasuries were mostly unchanged for the week.  The 2-Year U.S. Treasury yield was unchanged at 4.62%, while the 10-Year declined by 4bps to 4.20%.  This pushed the 2-10 Treasury spread from -39bps in the prior week to -42bps.

Key economic releases next week include the February Employment Report, ISM Services, and Factory orders.  We’ll also hear from the Presidents of the San Francisco, Cleveland, and New York Feds along with Chair Powell testifying before Congress.

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