Mixed economic outlook in a slow week for data releases
Summary
Last week was relatively muted in markets as a quiet economic calendar delivered mixed results and Fed speakers did little to dissuade current market expectations. Rates continued to move slightly higher as the market continues to coalesce around a slower pace of rate reductions.
Home sales
On Wednesday, existing home sales came in at 3.84M units, marking a 14-year low. Conversely, new home sales increased by 4.10% from last month, slightly beating expectations. Mortgage rates have continued to rise as the 30-year fixed mortgage sat at 6.54% as of Thursday’s release. This increase reflects rising benchmark rates and increasing spreads caused by asymmetric downside refinancing risk for lenders. With continued anticipated rate drops, mortgage applications fell a further 6.70%, marking the fourth consecutive week of decline.
Source: National Association of Realtors
Jobless claims
Thursday’s initial jobless claims reversed course again after an October spike, coming in at 227,000, 20,000 below forecasts. However, continued jobless claims rose from 1.86M to a multiyear high of 1.89M. This data brings mixed signals, likely still influenced by the effects from Hurricanes Helene and Milton. The job market’s stability fueled a steady increase in the 10-year Treasury, which climbed 15 basis points throughout last week to close at 4.24%. The higher rates strengthened the dollar to near three-month highs.
Source: FRED
Consumer sentiment
Consumer sentiment was revised upward on Friday to a final figure of 70.50, following a preliminary figure of 68.90. The revision confirms that consumers feel slightly stronger and continue to recover from July’s low of 66.40. Amid ambiguous signals from Fed speeches and uncertainty surrounding the upcoming U.S. election, this upward trend shows cautious optimism in the current market.
The week ahead
This week, markets will closely examine non-farm payroll, GDP figures, and the PCE release as the data-dependent Fed approaches the next Federal Open Market Committee (FOMC) meeting, where nearly all are expecting a 25-basis-point cut. Additional economic data releases on housing and oil will round out the week.
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About the author
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Amol Dhargalkar
Managing Partner, Chairman
Kennett Square, PA
Amol Dhargalkar is a Managing Partner and Chairman for Chatham’s Board of Directors. He brings over 20 years of experience in derivatives capital markets expertise.
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