Daily Market Color

Builder Confidence Reaches a 20-Year High


U.S. home builders benefited from low interest rates in 2019.. Builder confidence reached its highest level since 1999 as reported by the National Association of Home Builders. Key companies switched strategies and increased the volume of less-expensive homes built. Targeting the entry-level market led to an increase in purchases by millennials, who have a historically lower purchasing power than past generations. This increase may not continue to 2020, as labor costs are steadily increasing due to home builders having difficulty finding workers in the current strong economy. This could prove to be a risk for home builders who cater to entry-level buyers who need homes that can be delivered in a short timeframe. To combat this next year, builders are hoping to construct homes before they have buyers.



Last week’s jobless claims declined to 222,000. st meeting. This is a three-week low for the report, further supporting the strength of the labor market. A central driver behind the claims remains employers’ commitment to retain quality workers while the number of job openings continues to build. The report offers a welcomed recovery from early December where claims surprised markets with a 2019 high, albeit Thanksgiving falling so late in the year was the most likely cause of the spike. The economy’s growth has pushed the 10-year Treasury yield to rise slightly near 1.91%.



Day ahead. . Japan, which is the worlds No. 3 economy, will release reports on industrial output, November retail sales, and their jobless rate. Germany will also release their report on November retail sales. Rounding out the day, the Fed releases their weekly balance sheet report.


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