Market Review March 26, 2024

Today's Economic Event Overview: 

• Core Durable Goods Orders (MoM) (Feb): Orders increased by 0.50%, exceeding the forecast of 0.40% and showing a significant rebound from the previous month's decline of -0.30%. This indicates a recovery in the business investment sector, particularly in industries excluding transportation.

• Durable Goods Orders (MoM) (Feb): There was a robust increase of 1.40% in overall durable goods orders, surpassing the expected 1.20% and rebounding impressively from a previous sharp drop of -6.90%. This suggests strong demand for durable goods and a potential uptick in manufacturing activity.



• S&P/CS HPI Composite - 20 n.s.a. (MoM) (Jan): The index, which measures home prices in 20 major U.S. cities, decreased slightly by -0.10%, an improvement over the previous -0.30%. This mild decrease suggests some stabilization in the housing market.

• S&P/CS HPI Composite - 20 n.s.a. (YoY) (Jan): Year-over-year, home prices increased by 6.60%, aligning with forecasts and showing an increase from the previous 6.20%. This indicates ongoing strength in the residential real estate market despite month-to-month fluctuations.

• CB Consumer Confidence (Mar): Consumer confidence slightly decreased to 104.7 from a previous 104.8 and below the forecast of 106.9. This minor decline suggests a slight wavering in consumer optimism but overall still indicates a positive outlook.

• Atlanta Fed GDPNow (Q1): The model's estimate for Q1 GDP growth remains unchanged at 2.10%, consistent with previous forecasts, indicating steady economic growth expectations.

• 5-Year Note Auction: The yield on 5-year Treasury notes decreased to 4.24% from a previous 4.32%. This decline in yield suggests higher demand for medium-term U.S. government debt, possibly reflecting investor caution and a search for safer assets.

• API Weekly Crude Oil Stock: There was a significant increase in crude oil stocks, up 9.337 million barrels, a stark contrast to the previous decrease of -1.519 million. This large build could indicate a slowdown in oil consumption or an increase in production.

Impact Analysis

• Impact on USD:
• Positive durable goods orders are likely to support the USD, as they reflect robust economic activity.
• However, the significant increase in crude oil inventories and a slight decrease in consumer confidence could pressure the USD by suggesting softer economic conditions.

• Impact on Gold:
• The increase in crude inventories and the drop in 5-year note yields might drive investors towards gold, seeking stability amidst potential economic uncertainty.
• Gold may also benefit from the slight dip in consumer confidence as it enhances its appeal as a safe haven.

• Impact on Equity Futures:
• The solid gains in durable goods orders may boost optimism in equity markets, particularly in sectors related to manufacturing and consumer goods.
• However, the mixed signals from other indicators like consumer confidence and home prices might lead to cautious trading in the short term.

The data presents a mixed economic landscape with strong signs in durable goods contrasting with some caution reflected in consumer sentiment and bond yields. The large increase in oil inventories needs to be monitored for its potential implications on energy prices and inflation.