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November 28, 2021

Weekly Market Commentary November 22nd to November 26th 2021


We began the week with data on Existing Home Sales, which came in strong at 6.3 million vs. 6.2 million expected. Later in the week, New Home Sales were very disappointing. Sales for October were 745,000 vs. 800,000 expected, while last month’s tally was revised downward by 58,000. Somewhat higher mortgage rates and supply and labor constraints are beginning to weigh on buyers.

The closely watched Markit PMI survey came out on Tuesday. It showed expansion in both manufacturing and services, although services were a slight disappointment at a reading of 57 vs. 59 expected.

Initial Jobless Claims dropped to their lowest level since before the pandemic, at 199,000. Analysts were expecting 260,000. The reason for the massive improvement was likely inconsistent reporting from states due to the holiday week.

Durable Goods Orders fell -0.5% from last month due to poor aircraft orders. This was a surprise as analysts were looking for 0.2% growth. Besides that volatile segment, growth was in-line at 0.5%. Auto orders rebounded, rising 4.8%, and last month’s numbers were revised up.

PCE inflation data showed that inflation remains stubbornly high. Month-over-month, inflation increased 0.6%. Annually, inflation is running at 5% and 4.1% among core goods. This is the Fed’s preferred inflation gauge and it tends to be lower than the Consumer Price Index.

Stocks were spooked Friday by news of a new COVID-19 variant that is circulating in South Africa. The S&P 500 finished the week down -2.3% to 4,595, while the tech-heavy NASDAQ dropped -3.4% to 15,492. The yield on the 10-year U.S. Treasury fell from 1.54% to 1.48%, despite reaching 1.68% earlier in the week.

Next week’s economic releases include the ISM Manufacturing survey, Construction Spending, Factory Orders, and the Monthly Jobs Report.