Market Review: October 18, 2024

Today’s economic data provides mixed signals for the U.S. economy. Housing data showed a slight decline in building permits and a moderate drop in housing starts, while the Federal Budget Balance improved significantly, showing a surplus. Speculative positions on crude oil and tech stocks declined, while speculative interest in gold and the broader equity market rose. The GDPNow estimate for Q3 held steady, indicating strong economic growth momentum.



Today's Event Overview

• Building Permits (Sep) came in at 1.428M, slightly below forecast and previous readings, suggesting a mild slowdown in future construction activity.
• Housing Starts (MoM) (Sep) fell by -0.50%, worse than expected and a sharp reversal from the previous month’s strong growth, signaling weakening housing sector momentum.
• Atlanta Fed GDPNow (Q3) held steady at 3.40%, reflecting consistent expectations for strong economic growth in the third quarter.
• CFTC speculative positions showed diverging trends, with a decline in crude oil and tech stock positions, while speculative interest in gold and the S&P 500 increased.
• Federal Budget Balance (Sep) improved dramatically, with a surplus of $64.0B, up from the previous -$380.0B deficit, signaling improved government fiscal health.

Impact Analysis

• Impact on USD:
  The mixed housing data and steady GDP growth estimate suggest overall stability for the USD, while the significant improvement in the Federal Budget Balance is a bullish signal. The rise in speculative interest in equities further supports a bullish outlook for the currency.
• Impact on Gold:
  Increased speculative interest in gold futures and a drop in tech stock positions could provide support for gold, though the strong GDP growth outlook and improved fiscal position may weigh on safe-haven demand.
• Impact on Equities Futures:
  The strong rise in S&P 500 speculative positions signals bullish sentiment for the broader equity market. However, the decline in housing data and reduced speculative interest in tech stocks could weigh on specific sectors. The improvement in the Federal Budget Balance should provide overall support for equities.

The data today highlights a mixed but generally positive economic outlook. While the housing market shows signs of slowing, the broader economy remains on solid footing, as evidenced by the steady GDP growth estimate and improved government fiscal balance. The divergence in speculative positions reflects investor caution in specific sectors like tech and energy, while showing confidence in gold and broader equities.