Making Sense: In Brief
The week ahead for markets and the economy
Phil: Markets were again choppy last week as investors digested higher-than-expected inflation and the potential implications for Federal Reserve policy. Let's now look ahead to what to watch this week.
First, April retail sales, released Tuesday. The US consumer is critical to economic growth, and consensus expects retail sales to grow month over month, even after excluding gas and auto spending. Why is this data important for markets? Investors know that the US economy is on uncertain ground, and consumer spending is key to continued growth. If consumer spending were to deteriorate on a sustained basis, this would have a severe negative impact on company earnings and thereby financial markets.
Second item to watch, housing. Home affordability continues to slow thanks primarily to eye-watering price appreciation, and secondly due to higher mortgage rates. So far, the housing market has remained robust in the face of lower affordability thanks to incredibly tight supply. April housing starts on Wednesday and April existing home sales on Thursday will give us an indication to what extent homebuilders started home construction (i.e. future supply), what is the pace of home sales (i.e. demand) and finally, what is the supply of homes on the market. All three are important for financial markets as housing remains a bright spot in the economic landscape. Consensus expects both housing starts and home sales to decline modestly.
So takeaways for this week: one, consumer spending; and two, housing.
Making Sense In Brief Outtro Slide
Brent Ciliano
CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
brent.ciliano@firstcitizens.com | 919-716-2650
Phillip Neuhart SVP, Director of Market and Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
phillip.neuhart@firstcitizens.com | 919-716-2403
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