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Stocks Fluctuate, Treasurys Rise Amid Political Drama

All three major US stock indices finished near unchanged on the day, rallying in the late afternoon and paring losses generated from news of 13 Russian national indictments on charges connected to interference in the 2016 presidential election.  The S&P 500 closed the session with marginal gains and has now risen for six consecutive days, bringing the index back within 5% of its all-time high reached just 3 weeks ago.  US Treasurys rallied throughout the day, pushing the yield on the 10-year note 4 bps lower to 2.87%.  Throughout the course of the week, the 10-year yield touched a low of 2.81% on Wednesday and reached a high of 2.94% on Thursday following the release by the Labor Department’s robust monthly inflation data.  In commodities, crude oil futures gained an additional 0.5% on Friday, as WTI rose to $61.65/barrel, finishing the week 4% higher than it opened.  The US dollar climbed for the first time all week, gaining 0.5% against major currencies and bouncing off its three-year low levels.  In ever-volatile cryptocurrency market, Bitcoin finished the week near $10,100, up more than 17% over the past five days, but still well off its recent highs. 

 

 

Housing Starts Recover

The Commerce Department’s report on US homebuilding headlined today’s economic data reporting.  Housing starts rebounded from the prior month’s 8.2% fall, as new-home construction snapped up 9.7% to a 1.33 million annualized pace in January – its highest level since October 2016.  The multifamily sector accounted for the majority of the increase, where starts climbed 23.7%, as multifamily starts rose 1.4% MoM.  Another strong positive in the report, building permits surged 7.4% to their highest mark since June 2007 at a 1.40 million rate.

 

 

Other key economic data on the day included US import prices, which surged 1.0% higher last month, exceeding expectations of a 0.6% gain and rising sharply from December’s +0.2% level.  It was this week’s third report containing inflation data, and similar to the first two releases, contained data which painted a picture of steady future growth in consumer prices.  Excluding petroleum, import prices climbed 0.5% (+0.1% expected).

 

 

Dreamers with an Ongoing Nightmare

In the political arena, yesterday afternoon Senate lawmakers struck down two separate proposals related to the treatment of 1.8 million Dreamers, severely hindering the probability of a broad-scale immigration agreement during 2018.  The existing immigration program, known as the Deferred Action for Childhood Arrivals (DACA), is set to expire on March 5th, but in the meantime federal judges have instituted a temporary freeze to avoid an abrupt ending to the bill and potential deportation of thousands of young American inhabitants.  The tug-of-war between Republicans wanting increased border security and Democrats requesting funding and protection for the Dreamers remains the central hurdle in the struggle, with President Trump holding firm on his stance for border wall funding to be included in any deal to extend DACA.    

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