Market Review April 23, 2024

On April 23, 2024, a range of critical economic indicators were reported, offering insights into various sectors of the U.S. economy. These data points are crucial for gauging the health of the manufacturing sector, housing market, and general economic activity. Given the varied performance relative to expectations, these indicators can significantly influence market sentiments and policy decisions.

Today's Event Overview:



• Building Permits: Actual results came in at 1.467M, slightly above the forecast of 1.458M but below the previous month’s 1.524M. Building permits are a leading indicator of future construction activity and thus economic health.
• S&P Global US Manufacturing PMI (Apr): This key indicator of manufacturing health dropped to 49.9, falling below both the forecast of 52 and the previous month’s 51.9, signaling a contraction in the manufacturing sector.
• S&P Global Composite PMI (Apr): The composite PMI, which combines both manufacturing and services, reported at 50.9, slightly below the previous 52.1, indicating slowed growth in overall business activity.
• S&P Global Services PMI (Apr): The services PMI, critical for assessing the non-manufacturing sector, was also reported at 50.9, below the forecast of 52 and the previous 51.7, suggesting a cooling in service sector expansion.
• New Home Sales (Mar): Sales of new homes were robust at 693K, surpassing the forecast of 668K and markedly higher than the previous month’s 637K, indicating strong consumer confidence and demand in the housing sector.
• New Home Sales (MoM) (Mar): Monthly data showed a significant rebound with an 8.80% increase, a positive turnaround from the -5.10% contraction previously.
• 2-Year Note Auction: The yield on 2-year notes increased to 4.90% from the previous 4.60%, indicating rising interest rates which could reflect inflation concerns or adjustments in monetary policy.
• API Weekly Crude Oil Stock: A significant decrease in crude inventories (-3.230M) against a forecasted increase (1.800M) and previous (4.090M), suggesting stronger than anticipated demand for oil.

Impact Analysis:

• Impact on USD:
• Generally, the weaker-than-expected PMI data and stable but not stellar building permits data could pressure the USD due to concerns about economic slowdown.
• Higher 2-year note yields and strong new home sales could support the USD by indicating resilience and potential inflationary pressures which might lead to tighter monetary policy.

• Impact on Gold:
• Gold could find support from the safe-haven demand due to the contraction in manufacturing and overall business activity as indicated by the PMI data.
• Higher interest rates from the bond yields could initially dampen gold appeal; however, inflation concerns could reverse this if investors seek inflation hedges.

• Impact on Equity Futures:
• Mixed PMI data might create uncertainty in the equities market, with potential negative pressure from the manufacturing sector.
• Strong housing data and robust oil demand may bolster sectors related to these industries, providing some offsetting positive impact.

Today's data presents a mixed view of the economy, with strong signals from the housing market and crude oil demand juxtaposed against concerning declines in manufacturing and service sectors. Markets may exhibit volatility as investors and policymakers digest these divergent signals.