Macro – Stock Market Nerd – December 22, 2023

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Macro – Stock Market Nerd – December 22, 2023

Consumer & Employment

  • Conference Board consumer confidence for December was 110.7 vs. 103.8 expected and 101 last month.
  • Initial jobless claims of 205,000 compared to expectations of 214,000 and 203,000 for the last report.
  • Michigan consumer expectations and Sentiment of 67.4 and 69.7 respectively both beat consensus.
  • Personal spending rose 0.2% M/M in November as expected. This compares to 0.1% growth last month.

Output Data Including Housing

  • Building permits for November came in at 1.46 million. This missed 1.47 million estimates and compares to 1.50 million last month.
  • Housing starts for November came in at 1.56 million. This missed 1.36 million estimates and compares to 1.36 million last month.
  • Existing home sales for November came in at 3.82 million. This beat expectations of 3.78 million and compares to 3.79 million last month.
  • New home sales for November came in at 590,000. This missed expectations of 695,000 and compares to 672,000 last month.
  • The Philly Fed manufacturing Index for December was -10.5. This missed expectations of -3.0 and compares to -5.9 last month. Its employment index worsened M/M as well.
  • The most recent Q3 GDP revision came in at 4.9%. This compares to 2.1% last quarter.

Inflation Data

  • 5-Year Treasury Inflation-Protected Securities (TIPS) auction closed at 1.71% vs. 2.44% last auction as inflation concerns continued to ease and yields fall.
  • Core Personal Consumption Expenditures (PCE) rose 3.2% Y/Y. This is cooler than expectations of 3.3% and cooled vs. last month’s 3.4% reading too.
  • Core PCE rose 0.1% M/M. This is cooler than expectations of 0.2% and is stable vs. last month’s 0.1% reading.
  • PCE rose 2.6% Y/Y. This is cooler than expectations of 2.8% and cooled vs. last month’s 2.9% reading.
  • PCE rose -0.1% M/M. This is cooler than expectations of 0% and cooled vs. last month’s 0% reading.
  • Michigan 1-year inflation expectations for December are 3.1% as expected. This compares to 4.5% last month.
  • Michigan 5-year inflation expectations for December are 2.9%. This compares to 2.8% expected and 3.2% last month.

This was another great week for the disinflation and dovish Fed hypothesis. Not only was the Fed’s favorite inflation reading (Core PCE) cool across the board, but the yield on the 5-year TIPS auction fell off a cliff while yields continued to cool.

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