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Market Brief – Wednesday 11/25/20

Stocks and Treasury yields were flat in overnight trading ahead of today’s economic data dump. With the stock market closed for Thanksgiving and an early close on Friday, all of this week’s economic data was scheduled to be released today. Stocks and Treasury yields were down slightly in early trading.

Mortgage applications rose +3.9% last week as purchase applications rose +3.5% and refinance applications rose +4.5%.

Initial jobless claims missed expectations as 778k Americans filed for unemployment benefits last week. Total unemployment claims, including all forms of pandemic assistance, rose +135k to 20.452 million last week.

Durable goods new orders rose +1.3% in October and fell to -1.1% from this time last year. Excluding food and energy, core durable goods rose +1.3% in October.

The Personal Consumption Expenditure (PCE) Index was flat in October and slowed to +1.2% from this time last year. Excluding food and energy, the Core PCE Index was also flat in October and slowed to +1.4% from this time last year.

Personal incomes fell -0.7% in October while personal spending rose +0.5% as Americans tapped their savings in October. Inflation-adjusted personal consumption rose +0.5% in October.

The University of Michigan Consumer Confidence survey showed a small increase in current conditions and declines in consumer sentiment and expectations. Inflation expectations rose to +2.8% and five-year inflation expectations rose slightly.

New home sales rose +999k in October. The median new home price fell to $330.6k and the average selling price fell to $386.2k.

The Department of Energy reported crude oil inventories as Crude: -754k (+127k expected), Cushing: -1.721mm (-920k expected), Gasoline: +2.180mm (+614k expected), and Distillates: -1.441mm (-1.586mm expected). Crude oil rose slightly following the report.

Stocks were unchanged on the day while Treasury yields were battered higher for the third day in a row as sellers took last month’s FOMC minutes to be inflationary when the Fed clearly stated QE would continue at the current pace through the end of next year before they considered tapering it. Since the purpose of QE is to lower rates, not raise them, continued QE will lead to lower Treasury yields despite the seller’s belief as otherwise.