Markets will be focused on Manufacturing data this week

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Published Date 2/27/2023

Stock indexes had a rough time last week, the DJIA -1,000, NASDAQ -392 and the S&P -110. It was the worst week of this year. This morning pre-opening futures trade the indexes began a little better. 10 year note at 8 am ET 3.97% +2 bps and MBS prices started -10 bps. In a sign of volatility, by 8:30 am the 10 year 3.94% -1 bps and MBS prices +5 bps from Friday.

Jan durable goods orders at 8:30 am: The key takeaway from the report was the strength seen in nondefense capital goods orders, excluding aircraft -- a proxy for business spending. Those orders were up 0.8% month-over-month following a 0.3% decline in December. Shipments of these same goods, which factor into GDP forecasts, were up a healthy 1.1% after declining 0.6% in December.

At 9:30 am the DJIA opened +205, NASDAQ +130, S&P +33. 10 year 3.92% -3 bps. FNMA 6.0 30 year coupon at 9:30 am +14 bps from Friday’s close and -14 bps from 9:30 am Friday morning.

Jan pending home sales increased 8.1% against forecasts of +1.1%, Dec revised from 2.5% to 1.1%.

This week’s focus is on manufacturing and services data. Normally the first Friday of the month markets would get monthly employment data, the Feb employment day will be released next Friday, delayed because of last Monday’s President’s Day holiday. The 10 year note has been trading in a 7 bps range over the last week, moving from 3.90% to 3.97%, this morning the 10 in very early trading (6 am) at 3.97%, at 9:30 am 3.92% -3 bps, MBS prices saw declines as much as 25 bps, by 9:30 am +14 bps.

All the savings accumulated from the pandemic windfalls are being depleted. Consumer credit card debt in Feb $930.6B, 18.5% from Dec. If you made minimum payments toward this average credit card balance, it would take you more than 17 years to pay off the debt and cost you more than $8,213 in interest, Bankrate calculated. The consumer has held up well so far, jobs are plentiful, incomes increasing as more big firms pass out raises; the sector is defying the Fed’s desire to slow down. It may be coming quicker than many believe.

This Week’s Economic Calendar:

• Monday;

8:30 am Jan durable goods orders (expected -4.5%, as reported -4.5%; ex transportation expected 0.0% increased 0.7%; core capital goods expected -0.1% increased 0.8%)

10 am pending home sales in Jan (expected +0.1%, increased 8.1%)

• Tuesday,

8:30 am Jan preliminary US trade deficit (-$91.0B)

9 am Dec Case/Shiller and FHFA home price (Case/Shiller -0.5%, FHFA -0.3%)

9:45 am Feb Chicago purchasing mgrs. index 945.0 from 44.3)

• Wednesday,

7 am weekly MBA mortgage apps

9:45 am final Feb PMI manufacturing index (47.8)

10 am Feb ISM manufacturing index (47.9 from 47.4)

Jan construction spending (+0.2% from -0.4% in Dec)

• Thursday,

8:30 am weekly jobless claims (200K)

Q4 productivity and unit labor costs (productivity +2.5% year/year, unit labor costs +1.4% year/year)

• Friday,

9:45 am final PMI composite index (50.5 same as the advance release)

10 am Feb ISM services sector index (54.5 from 55.2)

Source: TBWS

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