U.S. Economic Metrics Are Out: Indices In Focus

While the European Central Bank (ECB) received top billing today, there was a slew of secondary economic metrics released in the U.S. Performance in employment, home sales, and industrial production were all put under the microscope earlier in the session by investors. Thus far, the U.S. indices have received them well, posting gains during the first half of the session.

Business is booming in the U.S. Can anything derail the equities markets?

The Hard Data

Today’s metrics are a mixed bag:

Event                                                       Previous           Actual

Continuing Jobless Claims (Oct. 13)         1.888M           1.893M

Initial Jobless Claims (Oct. 20)                  222K                 233k

Pending Home Sales (MoM, Sept.)            -2.8%               0.0%

Pending Home Sales (YoY, Sept.)              -3.3%              -5.4%

Jobless claims are up moderately, while home sales have stabilized month-over-month. However, pending home sales year-over-year are down more than 2%. In my opinion, this is a reflection of the lending industry beginning to shift liabilities out of real estate and limiting financing options for buyers.

What Will Happen To Rates In December?!

Watching the behavior of regional lenders can give us an indication of what the Federal Reserve may have in store. Typically, smaller lenders cut back operations ahead of a potential interest rate hike. From here on in, paying more attention to lending and real estate numbers is a good idea.

According to the CME Group’s FedWatch application, traders think that there is 96.7% chance of a ¼ point raise of interest rates by the FED in December. But what about next week’s November 1 announcement? Projections say that there is a 98.5% chance of Yellen and the FED holding rates steady.

The markets do not like surprises. With only a 1.5% chance of a rate hike next Tuesday, any move in rates will be earth-shattering. Let’s keep our fingers crossed that the “smart money” gets this prediction right.