Construction Numbers Confirm U.S. FED Rate Hike

This morning has brought mixed sentiment to the U.S. indices. In the first hour since the New York cash open, the DJIA is up 50 and the S&P 500 down four. Volumes are not especially heavy, but the DJIA is trading in the vicinity of 25,000. Although things are quiet now, we may be in for another crazy weekly close for the indices.

Housing Data

My colleague Skerdian previewed the U.S. Housing reports a bit earlier. More information is always better, so If you haven’t already checked out his article be sure to give it a look.

It is becoming a theme, but recent economic numbers do not make a whole lot of sense. The Winter months have been especially brutal in many regions of North America. Today’s numbers suggest that builders are not afraid to put on their thermals and battle the elements:

Event                                                            Projected            Actual

Building Permits Change (MoM)(Jan.)            3.5%                  7.4%

Housing Starts Change (MoM)(Jan.)               3.4%                  9.7%

Also, the University of Michigan (UM) released its Consumer Sentiment Index for February. The report came in at 99.9, over the expected 95.5. Even though the statistic is an abstract academic construct, it reaffirms what most in the market already know — Americans currently have disposable income and are not afraid to spend it.

Overview

Things on the construction front are surprisingly rosy. Today’s strong numbers have come as a surprise to this analyst, as the Winter months typically reduce the desire to break ground on new projects.

So, what does it mean? In short, developers are going to ramp up operations ahead of rising interest rates. Construction costs money, most of which is borrowed. Basically, they going hard to beat a Summer/Fall lending crunch.

Traders agree that the price of money is going up. The CME FedWatch Index is now showing an 83% chance of a March rate hike for the USD, up 2% from yesterday. It turns out that today’s construction numbers were important indeed.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

Related Articles

EUR/USD Hovers Near $1.1400 as Traders Brace for U.S. Data and Trade Tensions

3 hours ago

Save

Galaxy Digital’s $42M Ethereum Transfer Triggers Market Anxiety

8 hours ago

Save

Oil Slips: WTI Sinks to $61.35 as Trade Uncertainty and OPEC+ Moves Loom

11 hours ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments