Market Review March 29, 2024

Today's Economic Event Overview: 

• Core PCE Price Index (YoY) (Feb): The year-over-year core Personal Consumption Expenditures (PCE) price index, which excludes food and energy, came in at 2.80%, aligning with forecasts and showing a slight decrease from the previous month's 2.90%. This suggests a subtle moderation in underlying inflation.

• Core PCE Price Index (MoM) (Feb): On a monthly basis, the core PCE price index rose by 0.30%, consistent with expectations and lower than the previous 0.50%. This indicates a cooling of inflation pressures on a month-to-month basis.

• Goods Trade Balance (Feb): The trade deficit widened to -$91.84 billion, more than the anticipated -$90.10 billion and previous -$90.51 billion. This indicates a growing gap between imports and exports, potentially reflecting stronger domestic demand and weaker foreign sales.

• PCE Price index (YoY) (Feb): The overall PCE price index increased by 2.50% year-over-year, meeting expectations but showing a slight acceleration from the previous 2.40%.

• PCE price index (MoM) (Feb): Monthly, the PCE price index increased by 0.30%, below the forecasted 0.40% and previous 0.40%, suggesting a stabilization in price increases.

• Personal Spending (MoM) (Feb): Personal spending rose significantly by 0.80%, outpacing the forecast of 0.50% and a stark increase from the previous month's 0.20%. This indicates robust consumer activity, which is a positive sign for economic momentum.

• Retail Inventories Ex Auto (Feb): Retail inventories, excluding autos, increased by 0.40%, indicating a build-up possibly in anticipation of continued consumer demand.

• Atlanta Fed GDPNow (Q1): The Atlanta Fed's GDPNow model estimate for Q1 GDP growth was revised upwards to 2.30% from the previous estimate of 2.10%, suggesting stronger economic growth than initially expected.

• CFTC Crude Oil speculative net positions: Speculative net positions in crude oil increased slightly to 278.0K from 277.8K, indicating a stable bullish sentiment among traders.

• CFTC Gold speculative net positions: Speculative net positions in gold decreased to 199.3K from 201.6K, showing a slight retreat in bullish sentiment for gold.

• CFTC Nasdaq 100 speculative net positions: Speculative net positions turned negative to -7.1K from a positive 11.2K, reflecting a shift to bearish sentiment among traders regarding the Nasdaq 100 index.

• CFTC S&P 500 speculative net positions: Speculative net positions for the S&P 500 improved but remained negative at -169.4K compared to -194.2K, indicating a reduction in bearish sentiment but still overall cautious.

Impact Analysis

• Impact on USD:
• The mixed data on PCE indexes along with the widening trade deficit could pressure the USD due to concerns over inflation and economic balance.
• However, strong personal spending and upward revisions in GDP forecasts may provide some support to the currency.

• Impact on Gold:
• Moderation in core inflation and a slight decline in bullish positions may temper gold's appeal as an inflation hedge.
• However, uncertainties reflected in trade and speculative positions might still support demand for gold as a safe haven.

• Impact on Equity Futures:
• Strong consumer spending and GDP growth could bolster equity futures, signaling a positive outlook for corporate earnings.
• The bearish shift in Nasdaq 100 positions might signal concerns in the tech sector, potentially impacting broader market sentiment.

The economic indicators suggest a complex picture with strong consumer dynamics but mixed feelings in trade and market speculations. The overall robust spending and growth expectations may encourage optimism, but trade deficits and shifts in market sentiments could introduce volatility.