Market Review March 14, 2024

On March 14, 2024, a comprehensive set of economic data was released, providing insights into the labor market, producer and consumer price inflation, retail activity, business inventories, and broader economic trends as indicated by the Federal Reserve's actions and the Atlanta Fed's GDPNow forecast.

Continuing and Initial Jobless Claims: There was a slight increase in continuing jobless claims to 1,811K from 1,794K but was below the forecast of 1,900K, suggesting a relatively stable labor market. Initial jobless claims decreased to 209K from 210K, better than the expected 218K, reinforcing this view.

Core PPI and PPI (MoM) (Feb): The Producer Price Index for February showed a higher than anticipated increase at 0.60% (forecast was 0.30%), indicating rising production costs, which could signal forthcoming consumer price inflation. The core measure, which excludes volatile items like food and energy, also rose by 0.30%, higher than the expected 0.20%.

Retail Sales Metrics:

• Core Retail Sales increased by 0.30%, less than the expected 0.50% but an improvement from the previous -0.80%, indicating a cautious rebound in consumer spending.
• Retail Control remained flat (0.00%), showing stagnation in a key component that feeds into GDP calculations.
• Overall Retail Sales rose by 0.60%, also less than expected but recovering from a significant drop the previous month.

Business and Retail Inventories:

• Business Inventories were flat (0.00%), against a forecast of a 0.20% increase, suggesting cautious business management amid uncertain demand.
• Retail Inventories Ex Auto increased slightly by 0.30%, matching the previous adjustment but still showing modest stock management.

Atlanta Fed GDPNow and Fed's Balance Sheet:

• The Atlanta Fed GDPNow estimate for Q1 GDP growth was revised downward slightly to 2.30% from 2.50%, possibly reflecting the mixed economic signals from the data released.
• The Fed's Balance Sheet saw a minor increase to $7,542B from $7,539B, indicating continued if cautious, liquidity provision by the central bank.



Impact on USD

• Stronger jobless claims data and higher PPI might support a stronger USD, as they suggest a resilient labor market and potential pressures that could lead the Fed to consider tightening monetary policy to curb inflation.

Impact on Gold

• Rising producer prices and the slight uncertainty in retail sales and GDP forecasts could bolster gold as a hedge against inflation and economic uncertainty.

Impact on Equity Futures

• The mixed retail sales and the slight revision in GDP forecasts may lead to cautious optimism in equity markets. Investors might weigh the stronger labor market against potential inflationary pressures and the modest uptick in business inventories.

The economic landscape on March 14 presents a picture of modest economic expansion tempered by inflationary pressures and cautious consumer behavior. The labor market remains a bright spot, but the mixed signals in retail and business inventories alongside slight GDP adjustments suggest a nuanced approach to economic forecasting and policy might be necessary.