The Market Week in Review

The U.S. stock market plummeted on the week as coronavirus fears ramped up.  Consequently, interest rates also recognized a considerable fall as the 10-year Treasury yield dropped from 1.47% last week to 1.13% today.  However, the price of safe-haven gold surprisingly fell 3.6% to $1,587 an ounce as analysts suspect higher margin calls imposed on gold traders and selling by hedge funds to cover losses elsewhere.  The price of crude oil also suffered its worst week since the Great Depression, dropping over 15% to $45.26 a barrel.

This Week's Economic Highlights

  • With mortgage rates continuing to be very low, sales continue to run hot as sales of newly-constructed homes jumped 7.9% in January.  Over the past year new home sales are up a strong 18.6% and now sit at a seasonally-adjusted annualized rate of 764,000, its highest since 2007.

  • Initial unemployment claims rose by 8,000 for the week ending February 22nd to a total of 219,000.  Meanwhile its more stable four-week average only rose by 500 to 209,750.  Continuing unemployment claims, which lags initial claims by a week, fell a slight 9,000 to 1.72 million.

  • GDP grew at a mild seasonally-adjusted annualized rate of 2.1% in the fourth quarter of 2019.  Consumer spending, which accounts for nearly 70% of GDP, rose a moderate 1.7%.

  • New orders for durable goods fell a slight 0.2% in January after jumping 2.9% the month prior.  However, when excluding military-related supplies, durable goods orders in fact rose 3.6%.

  • U.S. personal incomes rose by a steep 0.6% in January while consumer spending only increased 0.2%.  Meanwhile the Personal Consumption Expenditures (PCE) price index, a measure of inflation, rose a mere 0.1% in January.  However, PCE’s trailing 12-month rate ticked up to 1.7% in January from December’s 1.5%.

Quote

“Humans often can develop a robust and pathological fear of things that might not happen, to create realities that do not exist.”

– Elisabeth Phelps

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