housing market updates, PCE prices, more earnings
U.S. equity markets finished the week lower, as the Federal Reserve’s latest interest rate hike and disappointing retail sales data triggered a steep selloff. For the week, the Dow fell 1.7%, the S&P 500 shed 2.1%, and the Nasdaq contracted 2.7%. U.S. Treasury yields fell, as recession fears gripped global bond markets. The yield curve remained deeply inverted, with the 10-year note at 3.49%, while the two-year note yielded 4.19%. Oil prices tumbled on Friday, reversing gains from earlier in the week, as rate hikes from major central banks and declining industrial output among advanced economies worsened the outlook for global energy demand. The price of WTI crude—the U.S. benchmark—closed the week at $74 per barrel, down from close to $78 per barrel on Wednesday.
A bill to fund the government through Sep. 30, 2023—the end of the current fiscal year—is expected to pass Congress next week, after the U.S. Senate passed a record $858 billion annual defense bill and stopgap spending bill to extend current government spending levels by a week, giving negotiators more time to pass a full-year deal. The U.S. housing market will also be in the spotlight, with the NAHB Housing Market Index due for release on Monday, followed by housing starts and building permits on Tuesday. Data on new and existing home sales for November will be released later in the week. On Friday, the Bureau of Economic Analysis (BEA) will issue the Personal Consumption Expenditures (PCE) Price Index for November—the Federal Reserve’s preferred gauge of inflation. Companies reporting earnings next week will include Carnival Corporation, Nike, General Mills, FedEx, Micron Technology, and CarMax, among others.
KEY TAKEAWAYS
Updates on the U.S. housing market will arrive next week, including housing starts, building permits, and new and existing home sales for November
The National Association of Home Builders (NAHB) will issue its latest Housing Market Index on Monday, gauging homebuilder sentiment last month
On Friday, the Bureau of Economic Analysis (BEA) will release the Personal Consumption Expenditures (PCE) Price Index—the Fed's preferred gauge of inflation—for November
Companies reporting earnings next week will include Carnival Corporation, Nike, General Mills, FedEx, Micron Technology, and CarMax, among others
A Slowing Housing Market
The U.S. housing market will be in focus next week, with the National Association of Home Builders (NAHB) set to release its Housing Market Index for December on Monday, which will show whether homebuilder sentiment has continued to fall as higher prices and borrowing costs weigh on the market. On Tuesday, the U.S. Census Bureau will report on November housing starts and building permits. Housing starts are projected to have fallen slightly last month to 1.415 million from 1.425 million units in October.
On Wednesday, the National Association of Realtors (NAR) will release data on existing home sales for November. Existing home sales are anticipated to have fallen to 4.2 million units last month, down from 4.43 million in October and well below a peak of nearly 6.5 million in January. In October, existing home sales fell to their lowest level since 2011, excluding pandemic-related disruptions in early 2020, as rising mortgage rates, declining affordability, and limited supply have dented housing demand. Data on new home sales, coming up next Friday, is also projected to show a decline. Sales likely fell to 608,000 in November, down from 632,000 in October.
November PCE
More insights on inflation will arrive next week, with the Personal Consumption Expenditures (PCE) Price Index for November on Friday. The PCE Price Index is expected to have climbed 0.2% in November, slowing slightly from a 0.3% gain in October. On an annual basis, prices are projected to have risen 5.5% from a year earlier, down from 6% in October. The core rate, which excludes volatile food and energy costs, likely rose 0.2% last month and 4.7% from a year ago, easing from 5% in October.
The PCE Price Index is the U.S. Federal Reserve’s preferred gauge of inflation, as it tracks consumers’ purchasing decisions more accurately than the Consumer Price Index (CPI). The basket of goods making up the PCE Price Index is updated more frequently to reflect changes in consumer preferences, while the CPI uses a fixed basket of goods and services.