September 24, 2021

Weekly Market Commentary September 20th to September 24th 2021

Housing Starts and Permits both beat expectations in August. Housing starts rose 3.9% while permits advanced 6%. The industry has been troubled by a shortage of construction workers and materials such as appliances, windows, and other manufactured goods. Existing Home Sales dropped -2% in August, the first drop this reading has seen in three months. New Home Sales rose 1.5% on the month, a larger than expected increase. These readings, while still positive, are coming down from recent highs but we expect the consumer to remain in the housing market for the foreseeable future given the low mortgage rate environment and plateauing price increases.

The FOMC met on Wednesday. No changes were made regarding rates; however, the Committee did signal it would announce tapering bond purchases as early as November of this year. Remember, the Fed is looking at two things: employment and inflation. On the employment front, jobless claims and the unemployment rate have significantly improved this year despite still being higher than pre-pandemic levels. While the Fed maintains its stance that inflation is being propped up by transitory factors; the language in their statement changed from inflation “has risen” to “is elevated” – signaling these transitory factors may take awhile to clear up.

After a volatile week of trading, equity markets finished up for the week. The S&P 500 rose 0.5% to 4,455, while the DJIA saw gains of 0.6%. The Nasdaq finished pretty much flat at 15,048. In the fixed income market, the 10-year U.S. Treasury yield rose almost 10 basis points this week to 1.46%.

Next week’s economic releases include updated Q2 GDP, Personal Consumption Expenditures, and some manufacturing data.