Market Matters

This week seemed pretty heavy on Fed talk, with most of the data not moving the markets that much. President Biden announced he should be announcing his pick for Fed Chair by Thanksgiving. If Powell is picked, we expect more of the same, although if he does pick Brainard the markets would expect a more dovish Fed. Something to keep an eye since I think the 10-year would move lower with Brainard as the pick, I’m not sure if we would see such a bearish move if Powell is picked. Currently we continue to trade in our range from 1.52%-1.62%.

 

Initial Jobless Claims

Initial jobless claims only fell by -1k to 268k for the week ending November 13th vs. the revised level of 269k in the prior week. The 4-week moving average on headline claims has now declined to 272,750. Continuing claims, which lag by a week, fell -129k to 2.08mln vs. the revised level of 2.16mln from the week before. Both claims numbers are now the lowest since the week of March 14, 2020, but are still off significantly from pre-pandemic norms of 212k and 1.715mln, respectively.

 

Housing Starts

Housing Starts for October dipped to 1.52 million, which missed expectations of 1.579 million and is down 0.7% month over month. Building permits came in slightly higher than expectations at 1.65 million where the market was looking for 1.63 million, and they are up 4.0% m/m, slightly higher than expectations of +2.8% m/m. Single family starts fell by 3.9% to an annual pace of 1.04 million units, the weakest since August of 2020. The number of single-family homes that are authorized for construction but have not started, which is a measure of backlogs, rose to 152,000. The number of homes under construction but not yet completed rose to 1.45 million, which is the highest since 1974. It appears from this data that the economy is still seeing supply constraints disrupting building activity.

 

Retail Sales

Retail Sales for the month of October rose +1.7% month over month, beating market expectations of +1.4%. Retail Sales ex autos were also up +1.7% m/m, beating expectations of +1.0%, while the control group was up +1.6% m/m, beating expectations of +0.9%. Gas station sales were up 3.9% m/m, while autos were up +1.8% m/m. The largest contributor this month to retail sales was non-store retailer receipts, up +4.0%. This is a strong report showing that the US consumer is still strong.

 

Empire State Manufacturing

The New York Fed’s Empire State Manufacturing index for November came in a bit hotter than expectations at 30.9, beating consensus of 22.0. The prices received index climbed 7.3 points to 50.8, while a measure of the prices paid for materials increased to the level of 83, which is the second highest on record. Factory job growth is surging as well, with the index increasing 8.9 points to a record level of 26. The future general business conditions index dropped 15.1 points to 36.9, the lowest level since May. The future new orders index sank 16.6 points to 34.4, the second lowest level since December, while the future shipments index fell 20.1 points to 32.2 level, the lowest in the year. This is a strong report, inflation still seems hot and future expectations are weakening.