Market Review February 28, 2024

Today's Economic Event Overview: 

On February 28, 2024, a range of critical economic data was released, including GDP figures, trade balance statistics, and inventory levels. These figures provide key insights into the overall health of the economy, inflationary pressures, and trade dynamics.

GDP (QoQ) (Q4): The GDP grew by 3.20% in Q4, slightly below the forecast of 3.30% but significantly down from the previous quarter's growth of 4.90%. This deceleration suggests that while the economy continues to expand, the pace of growth is moderating.

GDP Price Index (QoQ) (Q4): The index rose by 1.70%, exceeding the forecast of 1.50% but lower than the previous rate of 3.30%. This indicates that inflationary pressures, while still present, have moderated compared to the prior quarter.

Goods Trade Balance (Jan): The trade deficit widened to -$90.20B from -$87.89B, worse than the expected -$88.40B. This widening deficit reflects a larger gap between imports and exports, which can be indicative of stronger domestic demand or weaker foreign demand for U.S. goods.

Retail Inventories Ex Auto (Jan): A slight increase in inventories, though at a slower pace than the previous month, could suggest a cautious approach by retailers, anticipating less aggressive consumer spending.

Crude Oil Inventories and Cushing Crude Oil Inventories: Both general and Cushing-specific crude inventories saw increases, indicating a potential slackening in oil demand or an uptick in production, which could influence oil prices and energy sector valuations.

Impact on USD

• The GDP growth, although slower, combined with a rising trade deficit and increased inventories, might weaken the USD as they suggest a cooling economy and increasing domestic consumption of imported goods without a corresponding increase in exports.

Impact on Gold

• The moderate rise in the GDP price index, indicating tempered inflationary pressures, might reduce the urgency for gold as an inflation hedge. However, uncertainties reflected in other economic areas could still support investor interest in gold.

Impact on Equity Futures

• Mixed GDP results and increasing inventories may lead to cautious optimism in equity markets. The slowdown in economic growth could temper expectations for corporate earnings, while inventory builds might suggest anticipation of lower sales growth.

The economic data presents a picture of an economy experiencing moderated growth and inflation with increasing external imbalances. The trends in crude inventories and the trade balance will be particularly critical to watch for their potential impacts on sector-specific performances, especially in energy and retail.