Stock markets snapped one of the longest weekly losing streaks on record with their best week since November 2020:
Stock markets rallied after a core inflation report showed consumer personal consumption expenditures prices rose 4.9% in April, down from 5.2% in March. Bond yields and mortgage rates have dropped as well over the past couple of weeks as recent reports suggest inflation peaked in March and seems to be moderating. Retail sales also took an unexpected jump showing that the strength of the economy has not subsided.
The Dow Jones Industrial Average closed the week at 33,212.60, up 6.2% from 31,261.90 last week. It is down 8.6% year-to-date.
The S&P 500 closed the week at 4,158.25, up 6.6% from 3,901.36 last week. The S&P is down 12.8% year-to-date.
The NASDAQ closed the week at 12,131.13, up 6.9% from 11,352.62 last week. It is down 22.5% year-to-date.
U.S. Treasury bond yields - The 10-year treasury bond closed the week yielding 2.74% down from 2.78% last week. The 30-year treasury bond yield ended the week at 2.97%, down from 2.99% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – Home mortgage rates appear to be stabilizing. The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of May 19, 2022 for the most popular loan products were as follows:
The 30-year fixed mortgage rate was 5.10%, down from 5.25% last week.
The 15-year fixed was 4.31%, down from 4.43% last week.
The 5-year ARM was 4.20%, up from 4.08% last week.
Initial Jobless Claims
Initial Jobless Claims fell by -8k to 210k for the week ending May 21st from the prior week's 218k print. The 4-week moving average of headline claims is now at 206.8k, which is running higher than the normal levels of 200k. Continuing claims, which lag by a week, actually rose by +29k to 1.346mln vs. the previous 1.317mln. This puts the 4-week moving average for continuing claims at 1.362mln.
Durable Goods Orders
Durable goods orders for April showed growth below consensus, with the headline posting +.4%, and ex-transportation up +.3%. Figures for March were downwardly revised as well, now at +.6% on headline vs. the previously released +1.1% increase. In the April data, shipments increased by +.1%, now posting the 11 out of 12 months of growth. However, this is down considerably from the increase in March of +1.4%. Primary metals were the main drivers of the rise in this category, growing by +.9%. Unfilled orders increased +.5% this month, which was the same as in March. Transportation equipment was the key driving force of the growth at +.7%. Also worth noting, inventories have grown for fifteen consecutive months, now at +0.8%. Nondefense new orders for capital goods increased by +.4%, with ex-air being at +.3%. Shipments in this category grew by +.6%, with unfilled orders increasing +.8%, and inventories rose +.5%.
New Home Sales
New Home Sales dropped -16.6% in April to an annualized rate at 591k units vs. the prior revised 709k unit pace in March. Looking year over year, new sales were down -26.9% from April 2021. The median price for a new home sold in April this year was $450,600, an increase of almost +20% from last year. The seasonally adjusted estimate of new homes for sale at the end of April was 444k, which represents a supply of 9.0 months (highest since 2010) at the current sales rate vs. the prior 6.9 months in March. Broken out by region, the Northeast was down -5.9% m/m and up +17.1% y/y; the Midwest down -15.1% m/m and down by -25.5% y/y; the South down -19.8% m/m and -36.6% y/y; and the West down -13.8% m/m and -12.4% y/y.