One step forward, one step back. Residential construction activity was softer than expected in January while industrial production rocketed skyward after falling in each of the previous three months, according to this morning’s updates from the US Census Bureau and Federal Reserve, respectively. Today’s economic data overall offers a mildly upbeat message. Considered in context with previous releases for January, the data du jour suggests that last month wasn’t the start of a new NBER-defined recession. The near-term outlook is still wobbly, but this morning’s reports hint at the likelihood that the US economy will continue to muddle through the recent rough patch and avoid a new downturn.
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Last week’s deep dive in Treasury yields continued to reverse course yesterday, offering a reprieve to the aggressive risk-off posture that’s been roiling markets lately. Today’s twin updates on US industrial production and housing construction for January will help determine if the crowd’s latest round of optimism is warranted. But for the moment, it’s clear that the bond market is having second thoughts about the wisdom of pricing in high odds of new recession. Until further notice, the feeling is mutual over in equityland as of yesterday’s sharply higher close.
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● NY Fed mfg index in Feb shows contraction for 7th straight month | RTT
● Homebuilder confidence wanes in Feb. dipping to 9-mo low | HousingWire
● Fed’s Kashkari: More steps needed to prevent meltdown repeat | WaPo
● The Stock Market Is Not the Economy | Strategy+Business
● Why New OPEC deal may not increase oil prices | USA Today
● UK: Oct-Dec Jobless Steadies As Wage Growth Falls | MNI
● China sends missiles to contested South China Sea island | Reuters