The Labor Department reported that initial jobless claims rose last week, but remain near historically low levels. The Fed has aggressively raised interest rates in an effort to tame wage inflation, but the labor market has remained largely resilient throughout the year. Claims in regular state programs climbed by 9,000 to 225,000 for the week ending December 24th, after reporting 216,000 initial claims the prior week. The four-week moving average dropped to 221,000 from 221,250 the prior week. The total number of people continuing to receive regular ongoing state benefits, a report which is lagged one week, increased by 41,000 to 1.710 million for the week ending December 17th.
The Commerce Department reported the goods trade deficit narrowed in November as imports and exports both fell. The deficit decreased 15.5% to $83.3 billion in November. Exports fell 3.1% to $168.9 billion and imports declined 7.6% to $252.2 billion.
The Commerce Department reported wholesale inventories rose 1.0% in November after gaining 0.6% the previous month. Year-on-year wholesale inventories have climbed 21.0%. Retail inventories increased 0.1% in November after falling 0.4% in October and are up 18.4% year-on-year.
The Federal Housing Finance Agency reported the house price index of purchase-only homes remained unchanged in October after climbing 0.1% in September. The year-on-year change in the house price index was 9.8% in October. The HPI is estimated using repeated observations of housing values for single-family homes on which at least two mortgages were originated and subsequently sold to Freddie Mac or Fannie Mae. The use of repeat transactions on the same unit helps to control for differences in the quality of the houses.
The S&P CoreLogic CaseShiller home price index decreased 0.52% in October after falling 1.35% in September, the fourth straight decline in home prices. The report indicates demand for housing continues to slow in September as higher mortgage rates and affordability pressure new homebuyers. The index climbed 9.24% in October from the same month in 2022. The index tracks changes in the value of homes in 20 metropolitan regions.
The National Association of Realtors reported the index of pending home re-sales declined in November for the tenth time this year. The number of contracts to purchase previously owned homes fell 4.0% in November after declining 4.7% in October. Pending home sales are down 38.6% on a seasonally adjusted year-on-year basis in November. Pending sales are a leading indicator in the housing sector as they reflect contracts signed, as opposed to actual closed and final sales.
BOND MARKET REVIEW
Friday’s yields for the 2-, 5-, 10- & 30-year Treasury benchmarks securities were 4.43%, 4.00%, 3.87% and 3.96%. The 2yr/5yr, 5yr/10yr, 10yr/30yr and 2yr/30yr spreads closed at -43, -13, 9, and -47 basis points respectively.
Mr. Clark has been in investment banking since 1983. He is a Chartered Financial Analyst. He has been a fixed income strategist at Stephens Inc. since 1996, developing investment strategies, policies and procedures for institutions consistent with overall asset/liability management.Read full bio