Market Review March 21, 2024

Today's Economic Event Overview: 



• Continuing Jobless Claims: The figure came in slightly below the forecast at 1.807 million compared to an expected 1.820 million, indicating a stable labor market.

• Current Account (Q4): The current account deficit was better than forecasted, recording -194.8 billion USD compared to an anticipated -209.0 billion USD. This shows a smaller deficit than expected, suggesting better international trade dynamics or investment flows.

• Initial Jobless Claims: Initial claims for unemployment benefits were 210,000, just below the forecast of 212,000, maintaining consistency with previous data and indicating stable employment conditions.

• Philadelphia Fed Manufacturing Index (Mar): The index reported a positive figure of 3.2, outperforming expectations of -2.6, which signals improvement in manufacturing activity contrary to predictions of contraction.

• Philly Fed Employment (Mar): Although negative at -9.6, this represents an improvement from the previous -10.3, hinting at less contraction in employment within the manufacturing sector.

• S&P Global US Manufacturing PMI (Mar): The PMI for manufacturing rose to 52.5 from 52.2, exceeding the forecast of 51.8 and indicating an expansion in manufacturing activities.

• S&P Global Composite PMI (Mar): This index remained steady at 52.2, aligning with forecasts and previous data, suggesting sustained growth in both services and manufacturing sectors.

• S&P Global Services PMI (Mar): The services PMI slightly missed the forecast, coming in at 51.7 against a forecast of 52.0, indicating a modest slowdown in service sector growth from 52.3 the previous month.

• Existing Home Sales (Feb): Sales of existing homes significantly surpassed expectations, with 4.38 million units sold against a forecast of 3.95 million. This represents a sharp increase of 9.5% month-over-month, highlighting robust demand in the housing market.

• US Leading Index (MoM) (Feb): The index increased by 0.10%, contrary to expectations of a -0.10% decline, suggesting potential future economic growth.

• 10-Year TIPS Auction: The yield on 10-year Treasury Inflation-Protected Securities rose to 1.93% from 1.81%, indicating increased investor expectations for inflation.

• Fed's Balance Sheet: The size of the Federal Reserve's balance sheet slightly decreased to $7.514 trillion from $7.542 trillion, reflecting minor shifts in monetary policy operations.

Impact Analysis

• Impact on USD:
• Improved job claims, a reduced current account deficit, and strong home sales are supportive of the USD, signaling robust economic fundamentals.
• Positive manufacturing data and PMI figures could further bolster the USD as they reflect economic strength.

• Impact on Gold:
• The positive economic indicators might pressure gold prices as the need for safe-haven assets decreases.
• However, the increase in TIPS yields could suggest rising inflation expectations, which traditionally supports gold as an inflation hedge.

• Impact on Equity Futures:
• Strong economic data, particularly in housing and manufacturing sectors, are likely to fuel optimism in equity markets.
• The consistent performance across multiple sectors suggests a positive outlook, potentially driving up equity futures.

The overall economic picture painted by these indicators suggests resilience and growth, which may foster investor confidence across various asset classes. The sustained positive developments, especially in key sectors like manufacturing and housing, reinforce a potentially bullish market sentiment.