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Market Matters

The first of two holiday shortened weeks is done…markets should continue to stay quiet as the calendar finds its way into the New Year next week. Global equity markets continue to trade on optimism of the U.S./China trade deal, while interest rates are trying to hold their ground.

 

Durable Goods Orders

Durable Goods Orders for November fell by -2%, now the biggest headline decline since May. Orders for motor vehicles and parts saw a rebound, posting up +1.9%, however, this wasn’t enough to offset the volatile drop in defense aircraft and parts orders, which fell by -72.7%. If we exclude defense, new orders were up +.8%. Stripping out all transportation, orders were unchanged MoM, while capital goods orders non-defense ex-aircraft (measure of future business investment) posted their second straight monthly gain, up by +.1%. There were also revisions to the October data, which saw total headline orders revised to +.2% from a previously reported +.5%, and orders ex-transportation revised to +.3% from a previous +.5%. For 2019, we know that the manufacturing sector has been plagued by the ongoing trade war between the U.S. and China. Durable goods orders, which are items expected to last at least three years, are now down -1.3%.

 

New Home Sales

New Home Sales for November rose by +1.3% to a 719k seasonally adjusted annual rate vs. the downwardly revised 710k back in October (orig.733k). November new home sales are now up +7.2% YoY, while the YTD reading is at +10.3%. Looking by region for MoM comparisons, the Northeast jumped +52.4%, the West rose +7.5%, the Midwest was unchanged, while the South fell by -4.1%. We see inventory levels holding steady at 323k, with the number of months needed to clear current supply at 5.4 months, and the median sales price at $330,800. As one would expect, lower inventories and rising sales continue to suggest a continued rise in overall prices. This also should paint a better picture for the housing market ahead, as starts and construction should continue to increase.

 

Weekly Mortgage Apps

Mortgage applications pulled back -5.3% for the prior week. Applications for Purchase and Refinance both fell by -5% from the previous week. Refinance apps are still 128% higher than the same week one year ago.

 

Initial Jobless Claims

Initial Claims for the week of December 21st declined -13K to 222K from an upwardly revised 235K last week. Last week, claims were originally reported to be 234K. December and January are the biggest months for labor market turnover for the year so consequently there tends to be extreme volatility in the claims. Looking ahead, we expect that claims will be little changed next week, followed by a spike higher in early January.