Market Review February 27, 2024

The economic data from February 27, 2024, presents a complex view with significant movements in durable goods, housing prices, consumer confidence, GDP forecasts, and treasury note yields, along with crude oil stocks. This diverse set of data points offers insights into different aspects of the economy, from consumer sentiment to industrial activity and market liquidity.



Core Durable Goods Orders (MoM) and Durable Goods Orders (MoM): Both core and total durable goods orders declined significantly more than expected. Core orders decreased by -0.30% against a forecast of 0.20%, while total orders dropped by a sharp -6.10% against a forecasted -4.90%, suggesting a pullback in business investment and potentially a broader industrial slowdown.

S&P/CS HPI Composite - 20 n.s.a. (YoY) and (MoM): The year-on-year housing price index rose by 6.10%, slightly above the forecast and previous month, indicating continued strength in home prices despite a monthly decrease of -0.30%. This suggests a complex housing market where prices are rising over the long term even as monthly movements show volatility.

CB Consumer Confidence: A significant drop in consumer confidence to 106.7 from a previous level of 110.9

and well below the forecast of 114.8 signals potential worries about the economic outlook among consumers.

Atlanta Fed GDPNow (Q1): The GDPNow forecast was revised upward to 3.20% from 2.90%, indicating a more optimistic economic growth outlook despite some negative data points.

7-Year Note Auction: The yield on the 7-year note increased to 4.33% from the previous 4.11%, reflecting higher interest rates that may be due to inflation expectations or increased risk perception among investors.

API Weekly Crude Oil Stock: An increase in crude oil stocks to 8.428M from 7.168M suggests that there may be a slowing demand or increasing supply in the oil market.

Impact on USD

• The weak durable goods orders could negatively impact the USD as they may signal an economic slowdown, reducing the attractiveness of U.S. assets. However, higher treasury yields and the upward revision in GDP forecasts might mitigate this effect by attracting investment in U.S. debt securities.

Impact on Gold

• The decrease in consumer confidence and the rise in treasury yields could boost gold as a safe haven. Gold often benefits from uncertainty and reduced consumer confidence as investors seek stability.

Impact on Equity Futures

• The sharp decline in durable goods orders and drop in consumer confidence might lead to bearish sentiment in equity markets, as these are indicators of economic health and consumer spending potential. However, positive adjustments in GDP forecasts could provide some support.

The day's data reflects a scenario of mixed economic signals where growth expectations are juxtaposed against immediate industrial and consumer concerns. The rising long-term interest rates coupled with declining confidence and durable goods orders suggest a cautious or defensive posture among investors and consumers alike.