Outlook The monthly supply is the ratio of new houses for sale to new houses sold. This statistic provides an indication of the size of the new for-sale inventory in relation to the number of new houses currently being sold. It indicates how long the current new for-sale inventory would last given the current sales rate if no additional new houses were built. Going back to the early-1960s (when the data began being collected), levels above 8-months have been consistent with recessions - with the only exception occurring in 2022. The current monthly supply is over 10. So, should we be worried about a pending recession? We do not think so. For a high new-home supply to indicate a pending recession, we would typically need to also see other serious economic issues, such as significant job losses and declining consumer demand. While the labor market has softened slightly and housing affordability remains a challenge, total overall housing inventory is still nowhere near the bloated levels seen before the 2008 financial crisis. A deeper look reveals that the high new-home supply is currently functioning as a pressure release valve for the frozen existing-home market where the average rate on outstanding mortgages is much lower than current market rates. As a result, the higher supply of new home is not a definitive red flag for the entire U.S. economy.
. . . U.S. equity markets saw a mixed and rotation-driven week, as investors continued to digest the Federal Reserve’s hawkish stance alongside new economic data and a renewed pullback in large-cap technology stocks. While headline indices appeared relatively stable, underlying activity told a different story, with weakness in large-cap technology offset by strength across other areas of the market. Following the prior week’s Fed meeting, markets remained highly sensitive to interest rate expectations. Recent data reinforced the view that monetary policy is likely to stay restrictive for longer, as inflation remains above the Fed’s target. The Fed’s preferred inflation gauge, the PCE index, showed price pressures continuing to run firm, with headline inflation rising to around 4.1% year-over-year.1 While this hasn’t materially worsened, it has done little to support a near-term pivot, keeping expectations elevated that policymakers may hold rates higher for longer or potentially tighten further if needed. In the bond market, Treasury yields were volatile throughout the week but generally trended lower by the end, particularly across longer maturities. The 10-year Treasury yield remained in the mid 4% range, while shorter-term yields stayed relatively elevated, reflecting continued sensitivity to Fed policy expectations and uncertainty around the path forward. Equity market performance was heavily influenced by a renewed sell-off in large-cap technology and semiconductor stocks. The Nasdaq declined meaningfully during the week, driven in part by profit-taking after a strong run and continued reassessment of valuations in a higher-rate environment. Semiconductor stocks were particularly volatile, even as select corporate earnings briefly boosted sentiment within the group. Despite weakness in technology, the broader market showed signs of resilience. There was a clear rotation into other sectors, including healthcare, utilities, and real estate, many of which benefited from easing long-term yields. Small- and mid-cap stocks outperformed, and equal-weight indices posted gains, signaling improving market breadth even as headline indices appeared more subdued. Economic data released during the week continued to point to a resilient, albeit gradually slowing, economy. Notably, first-quarter GDP was revised higher to an annualized 2.1%, reflecting solid underlying growth despite some softness in consumer spending.2 Business activity improved modestly, with purchasing managers’ indices indicating ongoing expansion across both manufacturing and services.3 At the same time, consumer spending and income remained solid, demonstrating continued economic strength despite elevated price levels. Another important influence was the continued decline in oil prices. Easing geopolitical tensions and progress toward restoring supply flows in the Middle East led to a meaningful drop in crude prices, with oil falling for a third consecutive week. Lower energy prices helped moderate inflation expectations at the margin and provided support to sectors sensitive to input costs and consumer demand. Overall, last week’s market performance showed a shift beneath the surface. While higher interest rates and persistent inflation continue to pressure parts of the market (i.e., technology), the broader environment remains supported by steady economic growth, improving market breadth, and easing energy prices. Looking ahead, markets will remain focused on inflation trends, growth data, and Fed communication, with volatility likely to persist as investors navigate an uncertain but still fundamentally stable backdrop. |
Aviance Capital Partnersis a Naples, FL-based registered investment advisor with advisors in Naples and Orlando. We provide professional wealth management, financial planning, and investment strategiessince 2009. Our financial advisors are fiduciaries, offering services such as retirement income planning, tax-efficient investing, and customized portfolio management, all designed to help clients achieve their long-term financial goals. Whether you're preparing for retirement or seeking a tailored investment management strategy, Aviance’s wealth advisorsin Naples and wealth advisors in Orlando provide financial planning and investment management services to investors in all of Florida and beyond. Thank you for reading. If you have any questions or concerns, or would like to speak with a member of our team, please click the button below to reach out to us. We would love to hear from you! |
