- Consumer spending in February recovered from a weak start to the year, with real spending exceeding expectations.
- The savings rate, as a percentage of disposable personal income, decreased.
- The February PCE inflation figure came in slightly below expectations (the chart shows monthly changes).
- The ISM Manufacturing PMI finally returned to growth in March, topping expectations.
- In response to the robust ISM PMI report, the market scaled back the anticipated Fed rate cuts for this year.
- Construction spending unexpectedly declined in February, amid softer private nonresidential construction and weaker public construction expenditures.
- Treasury yields have been trending higher.
- The ISM Services PMI fell short of expectations, indicating slower consumer spending and weaker economic growth…..BUT a higher likelihood that the Fed will cut rates sooner.
- The employment index remains in contraction territory, which could indicate slower job growth. The market likes this too since it also indicates sooner rate cuts.
- Fewer service firms are reporting rising costs, signaling slower supercore inflation.
- Short-term Treasury yields fell following the ISM Services report, while longer-dated yields continue to climb.
- Mortgage applications are running well below last year’s levels.
- Home purchases are increasingly made with cash.
- Existing home inventories are rising relative to 2023.
Market Data
- Here is a look at US equity ownership by market participant.
- The equity market is ignoring the recent sharp repricing in Fed rate cut expectations.
- Goldman says the S&P 500 will end the year roughly where it is now.
- BofA’s bullish signals are at a 30-month high, implying an almost synchronized global growth upturn.
Source: BofA Global Research
- The number of bearish US investors has dwindled
- Goldman sees share buybacks driving demand for stocks this year, …
Source: Goldman Sachs; @WallStJesus
- … as CEO confidence improves.
- Concentration risks remain extreme.
Source: Truist Advisory Services
- Bloomberg’s broad commodity index is above its 200-day moving average.
- Brent crude breached $90/bbl amid geopolitical tensions.
- Rising liquidity (boosted by higher bank reserves at the Fed) has been a tailwind for stocks.
Source: Oxford Economics
- But that support is expected to end this quarter.
Great Quotes
“Old age comes at a bad time.” (Ed Sullivan)
Picture of the Week
Spring in Jutland, Denmark
All content is the opinion of Brian Decker