Market Review February 22, 2024

For the economic events of February 20, 21, and 22, 2024, we have a variety of indicators from leading economic signals to bond auctions and job market data:

US Leading Index (MoM) (Jan): A continued decline from -0.20% to -0.40%, worse than the forecasted -0.30%, suggesting potential softening in economic activities going forward.

20-Year Bond Auction (Feb 21): Yield on 20-year bonds rose to 4.60% from the previous 4.42%, indicating higher borrowing costs possibly reflecting investor concerns about long-term economic stability.

API Weekly Crude Oil Stock (Feb 21): A decrease in crude oil stock from the previous week, although still above the forecast, suggests fluctuations in demand and supply dynamics in the oil market.

Continuing and Initial Jobless Claims (Feb 22): Both continuing and initial jobless claims fell, pointing to a robust labor market which continues to show resilience.

S&P Global US Manufacturing PMI (Feb): An increase over expectations indicates a slight expansion in manufacturing, which is a positive sign for industrial activity.

S&P Global Composite and Services PMI (Feb): Both indicators showed a contraction compared to January, reflecting a potential slowdown in both the service sector and overall business activity.

Existing Home Sales (Jan): A significant rise in home sales and month-over-month growth suggests a recovering real estate market, likely buoyed by consumer confidence and perhaps favorable mortgage rates.

Crude Oil and Cushing Inventories (Feb 22): A decrease in crude oil inventories compared to the previous week points to a tightening market, while Cushing inventories saw a slight increase.

30-Year TIPS Auction (Feb 22): A significant rise in yields from 1.97% to 2.20%, suggesting increased inflation expectations over the long term.

Fed's Balance Sheet (Feb 22): A reduction from the previous week might indicate a tightening of monetary policy or a reduction in asset purchases.

Impact on USD

• Strong job market data and higher bond yields should support the USD as they suggest economic stability and potential tightening of monetary policy. However, the leading index decline and PMI contractions might temper optimism.

Impact on Gold

• Increased yields on long-term TIPS and uncertainty from mixed PMI data could boost gold as a hedge against inflation and economic uncertainty.

Impact on Equity Futures

• Positive job data and robust home sales provide support to equity markets, but PMI declines and potential tightening in monetary policy could lead to cautious trading.

The economic indicators from February 20-22 present a mixed landscape. While the job and housing markets show strength, leading economic indicators and PMIs suggest caution. Bond yields reflect rising long-term cost concerns, which could impact borrowing and spending decisions.