Weekly Economic Review | January 2, 2024 | Stephens

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Weekly Economic Review | January 2, 2024

Jan 2, 2024

Economic Review

The Labor Department reported that initial jobless claims increased last week, while remaining at a level that reflects a resilient labor market. First time claims in regular state programs increased 12,000 to 218,000 from the prior week’s upwardly revised 206,000 for the week ending December 23rd. The four-week moving average dropped to 212,000 from 212,250 the prior week. Continuing claims, which include people who have received unemployment benefits for a week or more, climbed 14,000 to 1.875 million for the week ending December 16th.

The Federal Reserve Bank of Chicago reported the pace of U.S. economic activity edged higher in November. The Chicago Fed National index, which draws on 85 economic indicators, was positive 0.03 in November after reporting a downwardly revised negative 0.66 in October. All four broad categories of indicators used to construct the index increased from October and two categories made positive contributions. A reading above zero indicates above-trend-growth in the national economy.

The Federal Housing Finance Agency reported the house price index of purchase-only homes increased 0.3% in October after gaining 0.7% in September. The year-on-year change in the house price index was 6.3% 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 rose 0.64% in October after gaining 0.67% in September. This is the ninth straight increase in prices, reflecting strong buyer demand amid a tight supply of listings. The index increased 4.87% in October from the same month in 2022. The index tracks changes in the value of homes in 20 metropolitan regions.

The Commerce Department reported the goods trade deficit widened in November as both exports and imports declined. The deficit increased 0.8% to $90.3 billion in November. Exports dropped 3.6% to $165.1 billion and imports declined 2.1% to $255.4 billion.

The Commerce Department reported wholesale inventories declined 0.2% in November after falling 0.3% in October. Year-on-year wholesale inventories are down 3.1%. Retail inventories declined 0.1% in November after declining 0.1% in October and are up 5.1% year-on-year.

The National Association of Realtors reported the index of pending home re-sales remained unchanged in November. Pending home sales are down 5.2% from a year earlier on an unadjusted basis. The combination or high mortgage rates and lack of housing inventory continues to be a major constraint to rising sales. Pending home sales are based on houses under contract as reported by over 100 multiple listing services and 60 large real estate brokers. A sale is listed as pending when a seller accepts a sales contract on a property. 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

Rates were mixed last week with very light trading during the holiday week. Friday’s yields for the 2-, 5-, 10- & 30-year Treasury benchmarks securities closed at 4.25%, 3.85%, 3.88% and 4.03%. The 2yr/5yr, 5yr/10yr, 10yr/30yr and 2yr/30yr spreads closed at -40, 3, 15, and -22 basis points respectively.

Economic/Events Calendar

Tuesday

January 2

Nov Construction Spending (0.6%)

9:00 Central

Wednesday

January 3

Dec 29th MBA Mortgage Applications

6:00 Central

Dec ISM Manufacturing (47.2)

9:00 Central

Nov JOLTS Job Openings (8,836k)

9:00 Central

Dec 13th FOMC Meeting Minutes

13:00 Central

Thursday

January 4

Dec ADP Employment Change (120k)

7:15 Central

Dec 30th Initial Jobless Claims (215k)

7:30 Central

Friday

January 5

Dec Change in Nonfarm Payrolls (170k)

7:30 Central

Dec Unemployment Rate (3.8%)

7:30 Central

Dec Avg Hourly Earnings-YOY (3.9%)

7:30 Central

Dec Labor Force Participation Rate (62.8%)

7:30 Central

Nov Factory Orders (2.3%)

9:00 Central

Nov Factory Orders Ex Transportation

9:00 Central

Dec ISM Services Index (52.5)

9:00 Central

About the Expert

Troy Clark

Senior Vice President, Fixed Income Strategist, Fixed Income Sales & Trading

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.

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Source: Bloomberg L.P.
  1. This report has been prepared solely for informative purposes as of its stated date and is not a solicitation, or an offer, to buy or sell any security. All expressions of opinion reflect the judgment of the individual expressing the opinion and are subject to change. This report does not purport to be a complete description of the markets or developments referred to in the material. Information included in the report was obtained from internal and external sources which we consider reliable, but we have not independently verified such information and do not guarantee that it is accurate or complete. Prices, yields, and availability are subject to change with the market. There is no assurance any forward looking statements will be realized or any of the trends mentioned will continue. Nothing in this report is intended, or should be construed, as legal, accounting, regulatory or tax advice. Additional information available upon request. 2024 Stephens Inc., Member NYSE/SIPC.