November 22, 2021

Weekly Market Commentary November 15th to November 19th 2021

Regional manufacturing data kicked off the week with the Empire Manufacturing business survey increasing 11 points to 30.9. Respondents reported that growth remains strong, but pricing pressure remains, and firms plan on significant capital and technology investment to help address the issue.

U.S. “Core” Retail Sales (ex-auto & gas) increased for a third consecutive month at 1.4%. This was well-above the estimate of 0.7% while the prior month was revised downward to 0.5%. The Retail Sales control group that is used to calculate GDP increased 1.6%, again well-ahead of the 0.9% estimate. This surprise beat comes after several months of declining consumer confidence. Time will tell, but the larger-than-forecast beat may reflect the pulling forward of holiday shopping to avoid potential supply delays.

Import and export prices continue to remain elevated, with import prices rising 1.2% from a month ago and 10.7% from a year ago and the largest yearly increase since June. Export prices increased by 1.5% on a month-over-month basis, and a whopping 18.0% on a year-over-year basis and the largest increase since the index first debuted in September of 1983.

Continued shortages of labor and materials, as well as Hurricane Ida resulted in an unexpected decline in housing starts of 0.7% in October to a seasonally adjusted annual rate of 1.52 million units, down from the 14.5 year high of 1.73 million units in March. The backlog of homes to be built increased by 4.0%, to 152,000 which is the highest level since August 2006.

After opening the week at an all-time high, the S&P 500 closed at 4,697 a slight decline of 0.3% for the week. The 10-Year U.S. Treasury opened the week at 1.60% but closed at 1.54% after global COVID cases rose and Austria imposed a vaccine mandate and lockdown.

Next week’s economic releases include Durable and Capital Goods orders, PCE inflation, New Home Sales, as well as Consumer Confidence readings.

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