March 27th – Weekly Update

  • The S&P 500, Nasdaq and Dow Jones tumbled during a period populated with ongoing Fedspeak and White House debate over health care, tax reform and budget priorities. Gold advanced and oil prices dipped. The 10-year U.S. Treasury yield closed at approximately 2.41%.
  • A number of Federal Reserve (Fed) officials made policy outlook comments during the week. New York Fed President William Dudley said the U.S. economy is in a pretty good place right now, and that the Federal Open Market Committee (FOMC) is quite close to achieving its objectives. He added that there could be an inflation problem if the unemployment rate is pushed much lower.
  • Dallas Fed President Robert Kaplan said that monetary policy tightening should be done deliberately, but patiently. He reiterated his forecast for gross domestic product (GDP) growth above 2% this year, and he stated that the Fed is reaching the point where it should let the balance sheet run off.
  • February new home sales came in at a 592K seasonally adjusted annual rate (SAAR), better than January’s upwardly revised 558K level (up from 555K) and well ahead of consensus for 565K. This was the highest reading since July 2016, with sales recovering from a recent trough of 535K in December. Sales have risen 12.8% since February 2016.
  • February existing-home sales dropped 3.7% to a 5.48M SAAR, below January’s 5.69M reading and the consensus of 5.57M. While this was a drop from January’s 10-year high, the pace of sales was still up 5.4% year-to-year. The release further noted that low supply in the affordable range was pressuring prices.
  • January’s Federal Housing Finance Agency (FHFA) house price index was flat month-to-month against December’s 0.4% rise and the consensus for 0.5%. The release noted this was only the second non-positive monthly reading for the index since 2012.
  • February’s U.K. Consumer Price Index (CPI) reading rose 2.3%, year-over-year, above expectations. The month-to-month CPI was up 0.7%, also beating consensus.
  • Euro zone hourly labor costs rose 1.6% during the fourth quarter of 2016, year-to-year, in line with expectations and following a 1.5% increase during the third quarter.

CPWM Weekly Market Monitor (2017.03.27)