Market Review: November 19, 2024

Data from November 19 highlights mixed signals for the U.S. economy. The housing market showed notable weakness, with building permits and housing starts falling below expectations, reflecting slowing construction activity. In contrast, the Atlanta Fed’s GDPNow estimate for Q4 growth was revised upward to 2.60%, signaling improved economic resilience. Meanwhile, crude oil inventories surged significantly, suggesting softer energy demand, which may weigh on oil prices and energy equities.

Today's Event Overview:

1. Building Permits (Oct): Building permits fell to 1.416M, below the forecast of 1.440M, signaling reduced forward-looking activity in the housing market.
   
   
2. Housing Starts (MoM and Total): Housing starts fell by -3.10% month-over-month, a sharper decline than the prior -1.90%. Total housing starts dropped to 1.311M, falling short of the forecasted 1.340M, reflecting a slowdown in new construction.
   
   
3. Atlanta Fed GDPNow (Q4): The GDPNow estimate for Q4 growth was revised up to 2.60%, indicating a slightly stronger economic outlook and resilience in broader activity.
   
   
4. API Weekly Crude Oil Stock: Crude oil inventories increased by 4.753M barrels, significantly exceeding the expected build of 0.800M. This indicates a large supply build, raising concerns about weaker energy demand.
   
   

Impact Analysis:

• USD Impact:
  The weakness in housing data is bearish for the USD, as it reflects slower activity in a key economic sector. However, the upward revision in GDP growth provides a counterbalance, supporting USD resilience by signaling broader economic strength. Overall, the USD impact is mixed, leaning slightly bearish due to the weight of the housing data.
  
  
• Gold Impact:
  Gold may see bullish momentum as weaker housing data points to potential economic softness, increasing safe-haven demand. However, the stronger GDPNow estimate offsets this somewhat, as improved growth expectations reduce the need for gold as a hedge. Overall, the gold outlook is mixed but leans slightly bullish due to the weak housing data.
  
  
• Equities Futures Impact:
  Equities may face mixed reactions. The weaker housing market data could pressure real estate and construction-related stocks, while the higher crude oil inventories may weigh on energy equities. On the positive side, the stronger GDPNow estimate supports broader market sentiment, providing optimism for growth sectors. The overall equities outlook is slightly bearish, with sectoral pressures from housing and energy outweighing GDP-driven optimism.

Today’s data paints a picture of a U.S. economy showing resilience in broader growth while facing challenges in housing and energy demand. The weakness in housing market activity underscores potential headwinds for consumer-driven sectors, while rising crude oil inventories suggest subdued energy demand. However, the upward revision in Q4 GDP growth offers a silver lining, supporting the broader economic outlook. Markets are likely to weigh these contrasting signals carefully in their response.