3/25- Weekly Economic Highlights

Financial markets were mixed this week as Treasury yields increased amid ongoing developments in the Russia-Ukraine war and its impact on the global economy. The U.S. Treasury yield curve flattened as 2-year Treasury yields increased to approximately 2.30% while the 10-year Treasury yield increased to around 2.55%. U.S. stocks are headed for a second weekly gain while oil prices remain elevated at $113.64 per barrel due to tighter supplies.

Economic data was mixed this week. Sales of new U.S. homes fell 2% in February to an annualized pace of 772,000. This is the second month in a row of declining sales implying high prices and rising mortgage rates may be keeping potential buyers on the sidelines. The report also showed the median sales price of a new home increased 10.7% to $400,600 in February from a year earlier. Regionally, sales rose in the Northeast and Midwest but fell in the South and West. Durable goods orders fell 2.2%, missing the consensus of estimate (-0.6%) while reports from both the Richmond and Kansas City Federal Reserve Banks showed continued strength in manufacturing sector.

Consumers remain concerned about their near term economic prospects as U.S. consumer sentiment fell in March because of heightened uncertainty over Russia’s invasion of Ukraine along with ongoing inflationary pressures. The University of Michigan’s sentiment index dropped to 59.4 from 59.7. A gauge of current conditions decreased to 67.2 from 67.8 from a month earlier. Consumers expect inflation to rise 5.4% over the next year and expect prices will increase at an annual rate of 3% over the next 5 to 10 years. Although still above the Federal Reserve’s target inflation rate, it may offer some support to the Fed that long-term expectations remain anchored.

Next Week:

S&P Case Shiller 20-City Home Price Index, Personal Consumption Expenditures, Conference Board Consumer Confidence, Market News International Chicago Business Barometer, Labor Report, ISM Manufacturing

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© 2022 Chandler Asset Management, Inc. An Independent Registered Investment Adviser. Data source: Bloomberg and the Federal Reserve. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates.