November 18, 2023

Weekly Market Commentary November 13th to November 17th 2023

After a week with few economic data releases, this week doesn’t disappoint. Data releases ranged from inflation and consumption to manufacturing and housing.

The Consumer Price Index (CPI) remained flat at 0.0% for the month of October. This was lower than the 0.4% reported for September and 0.1% for the forecast. The CPI YoY was 0.1% lower than the forecast at 3.2%, which was 0.5% lower than the previous month. If we look at YoY CPI excluding Food and Energy, which tend to be more volatile components, the figure was 4.0% with the previous month’s figure at 4.1%. Core inflation is showing signs of slowing down with the main components contributing to the decline being food and energy costs.

Retail Sales for October were negative 0.1%, with September’s number being revised up to 0.9% from 0.7%. The components with the most movement were Health and Personal Care, up 1.1%, and Motor Vehicles and Parts, down 1.0%.

The Producer Price Index (PPI) came in at negative 0.5% for October. This was lower than the expected figure of 0.1% and lower than the previous month, which was revised from 0.5% to 0.4%. PPI YoY also came in lower than the 1.9% expectation at 1.3% and the previous month of 2.2%. The PPI excluding Food and Energy YoY also came in lower than expected and the previous month’s figure of 2.7% at 2.4%. Similar to CPI, lower energy prices lead to lower inflation figures.

Industrial Production, a measurement of output across various industrial sectors, came in lower than the negative 0.4% expected at negative 0.6% for October. September was also revised lower from 0.3% to 0.1%. Capacity Utilization, a percentage of potential output, was also lower than expected at 78.9% versus expected at 79.4%. Both of these indicators would suggest that manufacturing is cooling down.

Housing data closed out the week. Housing Starts, the number of homes where construction began in the month, was 1,372k in October. This was higher than the 1,350k expected and the prior month, which was revised from 1,358k to 1,346k. Building permits were also higher in October at 1,487k. These figures highlight the need for houses as demand for homes remains higher than the available supply.

The stock markets were up for the week. The S&P 500 was up 2.2% finishing the week at 4,514, while the Nasdaq increased 2.4% to 14,125 and the Dow Jones Industrials rose 1.9% to 34,947. The 10-year U.S. Treasury yield decreased to 4.43% this week from 4.62% at the end of last week.

Next week’s releases to keep an eye on include Existing Home Sales and Durable Goods Orders.

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