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Market Matters

This week was relatively tame since we are now in the Fed member's quiet period before the next Fed meeting. We saw a nice rally on Monday and Tuesday, before the market moving higher the remainder of the week. Next week we have the Federal Reserve meeting on Tuesday and Wednesday, with the FOMC Statement and Powell Press Conference on Wednesday. We also have the monthly Nonfarm payrolls report on Friday, so it is an important week. Play it safe and be defensive, especially before the Fed meeting.

 

Initial Jobless Claims

Initial Jobless Claims were down -5k to 180k for the week ending April 23rd vs. the prior week's revised print at 185k (orig. 184k). The 4-week moving average on headline is now sitting at 179.75k vs. the prior week's average of 177.5k. Continuing claims, which lag a week, fell -1k to 1.408mln from 1.409mln. This is now the lowest reading for continuing claims since February 1970.

 

GDP

According to the advance estimate from the BEA, GDP for Q1 declined by an annual rate of -1.4% vs. the expected rise of 1.1% and vs. the Q4 2021 print of 6.9%. Within the Q1 2022 estimate, personal consumption expenditures contributed 1.83 percentage points, and while that's a pretty ordinary quarter by historical standards, it was the largest since last Q2. Fixed investment contributed 1.27 pp, with 1.17 pp of that from nonresidential factors. The change in private inventories accounted for -0.84 pp, and government consumption expenditures/investment accounted for -0.48 pp, a touch weaker than Q4's -0.46 and the largest negative contribution since Q4 2013. The one piece of this quarter's report that really stood out was a huge negative contribution from net exports, which subtracted -3.20 pp from headline growth, broken down into -0.68 from exports and -2.53 from imports. Given the record-breaking trade deficits we've seen of late, including the huge jump in the preliminary goods trade deficit released yesterday, this wasn't too much of a surprise. Overall, while the headline missed expectations, there was a high probability that we would see a miss for Q1, especially given the surge of Covid-19 cases in January and Russia's invasion of Ukraine, and expectations of Fed tightening this year.

 

Durable Goods Orders

Durable Goods Orders for March came in a bit under expectations at 0.8% MoM, missing market expectations of 1%. Shipments have increased by 1.1%, with March at 1.2%, while February was at 0.1%. Inventories increased by 0.1%, with March at 0.7%, with February at 0.6%. Unfilled orders dropped by 0.1% with March at 0.4% and February at 0.5%.

 

New Home Sales

New Home Sales for the month of March were at 763k, which is a slight miss of market expectations of 768k. MoM, new home sales were down 8.6%, a big miss from -0.6% the market was expecting, but that was due to February being revised up from 772k to 835k. Inventory saw a nice increase, from 392k to 407k, the largest pickup since August 2008. The increase in inventory did not help with affordability, as the median was up 3.6% MoM, and up 21.4% YoY. Sales slid in all four regions, though the drop in the South accounted for a large majority of the fall, from 461k to 414k. They dropped from 215k to 202k in the West, from 103k to 94k in the Midwest, and from 56k to 53k in the Northeast.