November 30, 2020

Weekly Market Commentary November 23rd to November 27th 2020

Durable Goods Orders rose 1.3% this month, well ahead of forecast. They were driven by strong sales of computers and electronic equipment. Businesses seem comfortable spending on equipment despite the recent economic turmoil. A few consumer sentiment surveys showed that consumers are also positive heading into the holidays. The latest estimate of Q3 GDP was unchanged at 33.1%. The Q4 report will show if the economy held up in the face of rising COVID cases and hospitalizations this winter.

New Home Sales totaled 999k on an annualized basis, in line with last month’s reading, and ahead of expectations. This marked a staggering 42% gain from this time last year. 385k of these homes have not even begun construction yet, marking a 14-year high for sales in this segment. Record-low inventory remains a roadblock, but consumer demand is red-hot. It will be interesting to see if rising housing prices lead to more sellers joining the market in 2021. Weekly Jobless Claims were a negative data point this week. They came in at 778k compared to a 720k estimate. In total, 20.5 million Americans are receiving some sort of jobless aid from state and federal programs.

Equity markets reached new highs as a third company, AstraZeneca, released promising vaccine data. The S&P 500 rose 2.2% for the week to a record close of 3,638. After a few weeks of underperformance, investors returned to tech stocks, helping the Nasdaq advance 3% this week, ending at a record 12,206. The yield on the 10-year U.S. Treasury edged up 1 basis point to 0.84%. Investors are still holding bonds for security in a bumpy economic environment. The 30-year U.S. Treasury yield was up 4 bps to 1.57%.

Key economic releases next week include the Monthly Jobs Report, Construction Spending, and the ISM services report.