The Market Week in Review

The U.S. stock market rallied back this week after a steep decline the week prior as the $2 trillion coronavirus stimulus bill heads to President Trump’s desk.  Consequently, interest rates moved lower as the 10-year treasury yield dropped from 0.92% to 0.72%.  Meanwhile the spread between the 10-year treasury yield and the 2-year treasury yield narrowed from 0.55% to 0.47%.  The price of gold rose nearly 9.0% on the week to $1,624 an ounce amid falling interest rates, a weaker U.S. dollar, Federal stimulus, and capital seeking a safe haven.  The price of crude oil continues to fall steeply, dropping nearly 9.0% to $21.57 a barrel, as demand falls due to the coronavirus and supply balloons from producers competing for a market share in a price war.

This Week's Economic Highlights

  • Sales of newly built homes fell by 4.4% in February to a seasonally-adjusted rate of 765,000 homes a year.  However, January’s sales report of newly built homes was revised upward to a seasonally-adjusted annual rate of 800,000 homes per year, the highest rate since June of 2007.  Despite the dip in sales in February, new home sales are still up 14.3% over the past year.

  • New orders of durable goods rose 1.2% in February thanks to a 2.0% increase in new orders of automobiles.  However, if transportation goods (which includes automobiles) is removed from the equation, new orders of durable goods in fact slipped by 0.6% as early signs of coronavirus damage begin to appear.

  • Initial unemployment claims skyrocketed from 282,000 to a seasonally-adjust 3.28 million in the week ending March 21st as large parts of the U.S. economy shutdown and business began to lay off workers due to the coronavirus pandemic.  Prior to the week ending March 21st, the largest single week increase in initial unemployment claims was 695,000 in October of 1982.

  • Consumer spending rose a mild 0.2% in February as consumers begin to cut back on spending and increase their savings to offset any reduction of incomes from the coronavirus.  That said, the savings rate rose from 7.9% to 8.2% in February while personal incomes still rose 0.6%.

Quote

“Fear incites human action far more urgently than does the impressive weight of historical evidence.”

     – Jeremy Siegel

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