The biggest economic figures of this trading week came out this Friday morning: Personal Consumption Expenditures (PCE) for November. These are the preferred measures for the Fed in determining monetary policy, including and especially interest rates. Results had been expected to drift favorably downward toward a “soft landing” for the economy; in reality, the numbers are even better than expected:
Headline month-over-month PCE last month came in at -0.1% from 0.0% expected — the lowest figure since -0.4% in April 2020, which was the heart of the Covid pandemic. Year over year, headline PCE slimmed to +2.6% from a downwardly revised +2.9% the previous month. This is the lightest print we’ve seen since February of 2021.
Stripping out volatile food and energy costs, core month over month was in-line with expectations at +0.1%, equaling the downwardly revised +0.1% for October. Core year over year PCE reached +3.2%, 20 basis points (bps) below the downwardly revised +3.4% the previous month, and is the lowest number since March 2021.
Personal Income for November was as expected: +0.4%, up from +0.2% the previous month, which was the lightest print since November of last year, and the strongest figure since this past August. Personal Spending came down from expectations a bit: +0.2% versus +0.3% expected. This follows a downwardly revised +0.1%. Adjusted Real Personal Spending reached +0.3%, up from the downwardly revised +0.1% previously, and the highest number since July.
That’s a lot of percentages bandied about. The at-a-glance takeaway is that personal consumption last month was lower than expected, which was incrementally lower over a longer term. Maning inflation continues to come down, while income levels are holding steady. This is more Goldilocks for the market, although not many pre-market stock buyers are taking the bait. Bond traders are: 2-year and 10-year yield rates are down further on this news.
Durable Goods Orders for November were much higher than anticipated: +5.4%, compared to the +2.0% analysts were looking for, and a near-perfect reversion from the previous month’s upwardly revised -5.1%. We would have to go to May 2020 to find a higher monthly figure. Ex-transportation reveals where most of these upward good orders went: +0.5%, reversing (and then some) the -0.3% from October, and the best month-over-month since May. Non-defense, ex-aircraft (a proxy for normal business spending) came in at +0.8%, the best number since August.
After today’s opening bell, New Home Sales for November are expected to reach 688K, up from 679K previously reported. Also, Consumer Sentiment for December looks toward an even-keel 69.4, the same as November’s print. Pre-market futures at this hour are negative on the Dow, -30 points, but +12 on the S&P 500 and +40 on the Nasdaq. Two-year bond yields currently sit at 4.35%, while 10-years are at 3.88%.
We’re off on Monday in observance of Christmas Day. May this long weekend bring peace and prosperity to you and your families.
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Wall Street Awaits New Home Sales Data
The biggest economic figures of this trading week came out this Friday morning: Personal Consumption Expenditures (PCE) for November. These are the preferred measures for the Fed in determining monetary policy, including and especially interest rates. Results had been expected to drift favorably downward toward a “soft landing” for the economy; in reality, the numbers are even better than expected:
Headline month-over-month PCE last month came in at -0.1% from 0.0% expected — the lowest figure since -0.4% in April 2020, which was the heart of the Covid pandemic. Year over year, headline PCE slimmed to +2.6% from a downwardly revised +2.9% the previous month. This is the lightest print we’ve seen since February of 2021.
Stripping out volatile food and energy costs, core month over month was in-line with expectations at +0.1%, equaling the downwardly revised +0.1% for October. Core year over year PCE reached +3.2%, 20 basis points (bps) below the downwardly revised +3.4% the previous month, and is the lowest number since March 2021.
Personal Income for November was as expected: +0.4%, up from +0.2% the previous month, which was the lightest print since November of last year, and the strongest figure since this past August. Personal Spending came down from expectations a bit: +0.2% versus +0.3% expected. This follows a downwardly revised +0.1%. Adjusted Real Personal Spending reached +0.3%, up from the downwardly revised +0.1% previously, and the highest number since July.
That’s a lot of percentages bandied about. The at-a-glance takeaway is that personal consumption last month was lower than expected, which was incrementally lower over a longer term. Maning inflation continues to come down, while income levels are holding steady. This is more Goldilocks for the market, although not many pre-market stock buyers are taking the bait. Bond traders are: 2-year and 10-year yield rates are down further on this news.
Durable Goods Orders for November were much higher than anticipated: +5.4%, compared to the +2.0% analysts were looking for, and a near-perfect reversion from the previous month’s upwardly revised -5.1%. We would have to go to May 2020 to find a higher monthly figure. Ex-transportation reveals where most of these upward good orders went: +0.5%, reversing (and then some) the -0.3% from October, and the best month-over-month since May. Non-defense, ex-aircraft (a proxy for normal business spending) came in at +0.8%, the best number since August.
After today’s opening bell, New Home Sales for November are expected to reach 688K, up from 679K previously reported. Also, Consumer Sentiment for December looks toward an even-keel 69.4, the same as November’s print. Pre-market futures at this hour are negative on the Dow, -30 points, but +12 on the S&P 500 and +40 on the Nasdaq. Two-year bond yields currently sit at 4.35%, while 10-years are at 3.88%.
We’re off on Monday in observance of Christmas Day. May this long weekend bring peace and prosperity to you and your families.