Major stock indices rose this week following a busy week for central bank announcements.
The Federal Reserve met and left the Federal Funds rate unchanged at 5.25% to 5.5%. The FED is still signaling three rate cuts later this year but nearly half of FED members are leaning towards only two rate cuts.
The Bank of Canada left its benchmark interest rate unchanged and predicted it would be done with quantitative tightening in 2025. Quantitative tightening is the process of not replacing bonds in its portfolio when they mature, essentially reducing the amount of money.
The Bank of Japan finally abandoned its negative interest rate policy and raised short term interest rates to between 0.00 and 0.01%. Japan is the last country to abandon negative interest rates. It also abandoned its policy of controlling long term interest rates, known as yield curve control, as well as buying exchange traded funds of stocks. The bank may still buy bonds but without a strict yield curve control.
The Bank of England met and left its short-term rate at 5.25%.
Turkey’s central bank raised its short-term interest rate from 45.0% to 50.0% to fight its high inflation rate.
The Swiss National Bank cut its short-term interest rate 0.25% to 1.5% and cited progress against inflation.
Treasury bond yields rose with the 30-year bond yield at 4.387% and the 10-Year note at 4.213%. Freddie Mac reported that the average 30-year mortgage rate rose to 6.87%. Crude oil fell to $80.80 a barrel and natural gas rose to $1.810 per MMBTUs. The U.S. dollar index rose to 104.45 and gold fell to $2166.20 an ounce.
In economic reports this week:
- China reported: for the first two months of the year:
- Retail sales rose 5.5% from the same period last year.
- Online retail sales rose 14.4%.
- Fixed asset investment rose 4.2%.
- Real estate investment fell 9%.
- Retail sales rose 5.5% from the same period last year.
- The National Association of Realtors reported that existing home sales surged 9.5% in February but were down 3.3% from a year ago.
- The inventory of unsold homes rose 5.9% in January.
- The median price of a home sale was $384,500 up 5.7% from a year ago.
- The Commerce Department reported:
- Housing starts rose 10.7% in February from the revised January level and 5.9% above February 2023.
- Permits, a sign of future housing starts, rose 1.9% from January and 2.4% above February 2023.
- The Labor Department reported:
- Seasonally adjusted first-time claims for unemployment were 210,000, a decrease of 2,000 from the previous week’s revised level.
- The 4-week moving average of claims, designed to smooth out volatility, was 211,250, an increase of 2,500 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Seasonally adjusted first-time claims for unemployment were 210,000, a decrease of 2,000 from the previous week’s revised level.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 13.2MM BPD.
- Natural gas storage rose 7BN cubic feet and was above the highest level during the past five years at this time of year.
- Baker Hughes reported the number of oil rigs fell 1 to 509 and the number of natural gas rigs fell 4 to 112.
Please call us if you have any questions.
Loren Rex – Emeritus
Erik A Smith, AIF® – President & C.E.O.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
