Market Review January 10, 2024

On January 10, 2024, the financial markets responded to a slew of economic indicators that offered insights into the housing market, inventory levels, and broader economic projections. Key data included the Mortgage Bankers Association's (MBA) reports on 30-Year Mortgage Rates, the Purchase Index, and the Mortgage Market Index, alongside the U.S. Wholesale Inventories and Crude Oil Inventories. Additionally, the Federal Reserve Bank of Atlanta updated its GDPNow forecast, providing an early estimate of economic growth for the first quarter of 2024.

Impact on USD

The stable mortgage rates and slightly decreased activity in mortgage applications (both for purchases and the broader market) reflect a steady but cautious housing market, likely having a neutral to slightly positive impact on the USD, as they suggest a balanced economic activity without overheating. Meanwhile, the increase in wholesale inventories might indicate either an anticipation of higher demand or an oversupply issue, which could have mixed implications for the USD depending on the demand fulfillment. The significant increase in crude inventories signals potential concerns over energy demand or oversupply, potentially bearish for the USD. However, the Atlanta Fed's optimistic GDPNow forecast may counterbalance these concerns by indicating robust economic growth.

Impact on Gold

The economic data present mixed signals for gold. On one hand, the steady housing market and growth forecasts could dampen immediate safe-haven demand. On the other, significant increases in crude and wholesale inventories might raise concerns about potential economic imbalances, possibly boosting gold's appeal as a hedge against economic uncertainties.

Impact on Equity Futures

Equity futures could benefit from the optimistic GDPNow forecast, reflecting potential economic growth and improved corporate earnings prospects. However, the mixed signals from the housing market and inventory data might lead to cautious optimism, with sector-specific impacts based on the implications of inventory adjustments and energy supply concerns.

Comments

The economic indicators released on January 10, 2024, sketch a picture of an economy with underlying strengths, as suggested by the GDPNow forecast, yet facing nuanced challenges in the housing and energy sectors. The mix of steady mortgage rates, varying inventory levels, and robust growth projections underscores the complexity of economic conditions, which will require careful navigation by policymakers and market participants alike.