10-Year Treasury Yield
The 10-year Treasury yield edged lower on Friday as investors weighed mixed economic data and assessed the state of the economy. The yield on the 10-year Treasury sat at 4.412%, down just about 2 basis points. The 2-year Treasury yield was last trading at 4.377% after rising nearly 3 basis points. Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.
Housing Market Index - HMI
US homebuilder confidence at 7-month high in November, survey says. NAHB/Wells Fargo housing market index rises to 46, highest since April. Republican election sweep boosts builder optimism for regulations supportive for industry. Industry faces challenges from labor shortages, high materials costs, and mortgage rates U.S. homebuilder sentiment rose to a seven-month high in November and expectations for sales in the next six months surged to the highest in about two-and-a-half years after a Republican election sweep fueled optimism for regulatory changes that could lead to more residential construction, a survey said on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index rose to 46 this month, the highest since April, from 43 in October. The reading was higher than all 28 estimates in a poll of economists by Reuters, which had a median expectation for 43.
Treasury Intal Capital - TIC
The monthly data on holdings of long-term securities, as well as the monthly table on Major Foreign Holders of Treasury Securities, reflect foreign holdings of U.S. securities collected primarily on the basis of custodial data. These data help provide a window into foreign ownership of U.S. securities, but they cannot attribute holdings of U.S. securities with complete accuracy. For example, if a U.S. Treasury security purchased by a foreign resident is held in a custodial account in a third country, the true ownership of the security will not be reflected in the data. The custodial data will also not properly attribute U.S. Treasury securities managed by foreign private portfolio managers who invest on behalf of residents of other countries. In addition, foreign countries may hold dollars and other U.S. assets that are not captured in the TIC data. For these reasons, it is difficult to draw precise conclusions from TIC data about changes in the foreign holdings of U.S. financial assets by individual countries.
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for September 2024. The next release, which will report on data for October 2024, is scheduled for December 19, 2024. The sum total in September of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $398.4 billion. Of this, net foreign private inflows were $341.1 billion, and net foreign official inflows were $57.3 billion. Foreign residents increased their holdings of long-term U.S. securities in September; their net purchases were $263.1 billion. Net purchases by private foreign investors were $252.8 billion, while net purchases by foreign official institutions were $10.3 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $47.1 billion. After including adjustments, such as estimated foreign portfolio acquisitions of U.S. stocks through stock swaps, overall net foreign purchases of long-term securities are estimated to have been $216.1 billion in September. Foreign residents increased their holdings of U.S. Treasury bills by $20.4 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $20.9 billion. Banks’ own net dollar denominated liabilities to foreign residents increased by $161.4 billion.
Housing Starts
US single-family housing starts slump; high mortgage rates remain a challenge. Single-family housing starts drop 6.9% in October. Homebuilding declines sharply in the South and Northeast. Single-family building permits increase 0.5%. U.S. single-family homebuilding tumbled in October likely as Hurricanes Helene and Milton depressed activity in the South while permits rose slightly, indicating that an anticipated rebound probably would be muted by higher mortgage rates. The report from the Commerce Department on Tuesday suggested that residential investment, which includes homebuilding, remained subdued at the start of the fourth quarter after contracting in the last two quarters. The housing market has been battered by higher borrowing costs as the Federal Reserve tightened monetary policy to combat inflation. Economists at Goldman Sachs lowered their gross domestic product estimate for the October-December quarter to a 2.4% annualized rate from a 2.5% pace. The economy grew at a 2.8% rate in the third quarter. Single-family housing starts, which account for the bulk of homebuilding, plunged 6.9% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department's Census Bureau said. Data for September was revised higher to show homebuilding rising to a rate of 1.042 million units from the previously reported pace of 1.027 million units.Single-family starts dropped 10.2% in the densely populated South, large parts of which were devastated by Helene in late September. Milton struck Florida in October. Ground-breaking on single-family housing projects plummeted 28.7% in the Northeast, but increased 4.6% in the Midwest and the West.
Housing Permits
Permits for future construction of single-family housing gained 0.5% to a rate of 968,000 units, the highest level since April. They rose in the Northeast and South, but declined in the Midwest and West. Mortgage rates initially fell as the U.S. central bank started cutting interest rates in September. They have, however, erased that decline after the yield on the benchmark 10-year U.S. Treasury note rose to a 5-1/2-month high recently. Mortgage rates track the 10-year note.
E-Commerce Retail Sales
E-commerce sales are sales of goods and services where an order is placed by the buyer or where price and terms of sale are negotiated over the Internet. For Q3-2024 Actual 2.6% from 1.3% and revised 1.6%.
Geopolitical Risk
Russian President Vladimir Putin said a Russian strike in Ukraine was carried out by a new non-nuclear ballistic missile, which has a medium range.. Russia launched a new non-nuclear ballistic missile with medium range on Ukraine’s Dnipro region on Thursday, Russia’s President Vladimir Putin said in a televised statement, marking another significant escalation in the 1,000-day-old war. In response to the use of American and British long-range weapons, on November 21 of this year the Russian armed forces launched a combined strike on one of the facilities of the Ukrainian defense industry,
MBA Purchase Applications
The Market Composite Index, a measure of mortgage loan application volume, increased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 43 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 1 percent lower than the same week one year ago.
Oil - Commodity
Crude Oil price is set to close off this week above $70 after a week filled with headlines on ramped up tensions between Russia and Ukraine. Both countries are rushing to get the tactical upper hand ahead of possible resolution talks once President-elect Donald Trump takes office in January 2025. One of the new elements in the escalation is that Russia apparently has put a Polish (Poland is a NATO member) military base at the top of its target list for any subsequent retaliation if Ukraine attacks again, Yahoo News reports.
Jobless Claims
Jobless claims fall to 7-month low, show labor market 'trending sideways at a healthy level'. Weekly jobless claims rose less than expected last week, reaching a seven-month low, as the impact of labor strikes and severe weather has made weekly data noisy over the last few months. New data from the Department of Labor showed 213,000 initial jobless claims were filed in the week ending Nov. 16, down from 219,000 the week prior and below the 220,000 economists had expected.
Philadelphia Mfg Price Index
The US Philadelphia Fed manufacturing general business conditions index took a surprising step back to minus 5.5 in November from 10.3 in October after September's marginally positive 1.7. Forecasters were caught off guard by the return to contraction in November as consensus expectations called for a positive reading at 7.0, with a range of 0 to 11.0. Even as general business conditions were seen in contraction, most current sub-indexes remained somewhat positive. The key forward-looking one, new orders, only eased to 8.9 in November from 14.2 in October. Shipments were at 4.5 versus 7.4, and employment, everyone's focus, turned positive at 8.6 versus minus 2.2. On the current pricing front, the prices paid sub-index was pretty steady at 26.6 versus 29.7 while prices received were at 14.3 versus 17.9. The six-month outlook for general business conditions was remarkably buoyant at 56.6 in November versus an already upbeat 36.7 in October.
Existing Home Sales
Existing-Home Sales Grew 3.4% in October; First Year-Over-Year Gain Since July 2021. Existing-home sales climbed 3.4% in October to a seasonally adjusted annual rate of 3.96 million. Sales advanced 2.9% from one year ago, the first year-over-year increase in more than three years (July 2021; +1.8%). The median existing-home sales price ascended 4.0% from October 2023 to $407,200, the 16th consecutive month of year-over-year price gains. The inventory of unsold existing homes edged higher by 0.7% from the prior month to 1.37 million at the end of October, or the equivalent of 4.2 months' supply at the current monthly sales pace.
Leading Indicators
Economy on track to keep growing despite eighth straight decline in key gauge. Leading index has been negative for almost two years, even as U.S. expansion speeds up. The numbers: The leading indicators of the U.S. economy fell for the eighth month in a row in October, but there’s still no sign the current four-year-old expansion is in trouble. The leading index dropped 0.3% last month, the Conference Board said Thursday, largely because of higher jobless claims, fewer building permits and a decline in manufacturing orders.
Fed Balance Sheet
For wk11/20, 2024. Level Prior $6.967 T Actual $6.924 T. Total Assets - W/W Prior $-27.191 Actual $-43.377 B. Reserve Bank Credit - W/W Prior $-21.298 B Actual $-39.023 B.
Mortgage Rates
Mortgage rates moved higher for the fourth consecutive week, with the 30-year fixed rate increasing to 6.90 percent, its highest level since July 2024. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.78% as of November 14. That's down from 6.79% one week ago and 7.44% one year ago.
PMI Composite Flash
US S&P Global Composite PMI rose to 55.3 in November's flash estimate from 54.1 in October, showing that the business activity in the US' private sector continued to expand at an accelerating pace. S&P Global Manufacturing PMI improved to 48.8 from 48.5, highlighting an ongoing contraction, while the Services PMI rose to 57 from 55. Assessing the survey's findings, "the business mood has brightened in November, with confidence about the year ahead hitting a two-and-a-half year high," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said. The prospect of lower interest rates and a more probusiness approach from the incoming administration has fueled greater optimism, in turn helping drive output and order book inflows higher in November.
Consumer Sentiment Michigan
Michigan Consumer Sentiment Rises To 71.8, Missing Analyst Expectations. On November 22, 2024, the University of Michigan released the final reading of the Michigan Consumer Sentiment report for November. The report indicated that Michigan Consumer Sentiemnt increased from 70.5 in October to 71.8 in November, compared to analyst forecast of 73.7. The University of Michigan commented: “Consumer sentiment was little changed this month, inching up 1.3 index points from October. In November, sentiment extended a four-month stretch of consecutive incremental increases.”
Hedging - Gold
Gold price rallies to a new two-week high on Friday during the North American session as US Treasury bond yields drop. Geopolitics continued to play its part, keeping the golden metal bid, while US business activity improved, capping the non-yielding metal advance. The XAU/USD trades at $2,710, gaining 1.50%.
S&P 500 Index - Week Performance
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