Economic data from the final week of March painted a mixed picture. Investors digested a hotter-than-expected inflation report, shifting consumer sentiment, and housing numbers that were just shy of expectations. Here's a breakdown of what moved the markets—and what to watch heading into April.
How Did Markets React to Rising Inflation Concerns?
U.S. equities slipped as investors braced for a tariff announcement set for April 2nd and digested fresh inflation data. With inflation coming in above expectations, investors leaned toward more defensive sectors:
- Consumer staples, energy, and real estate saw gains.
- Technology, communication services, and industrials lagged due to concerns about rising borrowing costs.
What Economic Data Came Out Last Week?
Consumer Confidence Dropped Again
The Conference Board's Consumer Confidence Index fell to 92.9 in March—its lowest in four years. Future expectations hit a 12-year low, signaling that many households feel uneasy about what's ahead.
- Expected: 94.0
- Prior Month: 100.1
- Actual: 92.9
New Home Sales Slightly Missed Estimates
While February's new home sales came in below forecasts at 676,000, they still improved from January's reading of 664,000. Builders are watching tariff and immigration developments closely, as those could affect labor costs and materials.
- Expected: 680,000
- Actual: 676,000
Durable Goods Orders Surprised to the Upside
Orders for long-lasting goods rose +0.9% in February, a positive sign even though the prior month's reading was stronger. Some of the uptick may be due to companies ordering ahead of potential tariffs.
- Expected: –1.0%
- Prior Month: +3.3%
- Actual: +0.9%
Personal Income and Spending Rebounded
February data showed income rising +0.8% while spending grew +0.4%. Consumers appear to be cautiously opening their wallets after a slow January.
- Income Expected: +0.4%
- Income Prior: +0.9%
- Actual Income: +0.8%
- Spending Expected: +0.5%
- Spending Prior: –0.2%
- Actual Spending: +0.4%
What's Happening in the Bond Market?
Treasury yields moved in a familiar pattern last week:
- Yields on shorter- to medium-term bonds dipped.
- Longer-term yields, such as the 30-year Treasury, moved higher—continuing the steepening of the yield curve.
This type of curve movement often reflects investor expectations for slower growth but persistent inflation.
What Should Investors Watch This Week?
The first week of April brings several key reports:
- Tuesday, April 1st: ISM Manufacturing Index for March — Expected to show a slight decline into contraction territory.
- Thursday, April 3rd: ISM Services Index for March and U.S. Trade Deficit for February — Services may stay in growth mode; the trade deficit is expected to improve from $131.4 billion to $123 billion.
- Friday, April 4th: March Employment Report — Nonfarm payrolls are forecasted to rise by 120,000, with the unemployment rate ticking up to 4.2%.
Tom Hine is a CERTIFIED FINANCIAL PLANNER® professional and owner of Capital Wealth Management. With over 30 years of experience, Tom works with individuals and families on financial planning, retirement strategies, and investment management. He has a particular passion for special needs financial planning, shaped by his personal experience helping raise his sister Amy, who was born with a severe chromosomal condition. Tom understands the emotional and financial challenges that come with caring for a loved one with disabilities and helps clients navigate complex issues like preserving government benefit eligibility, coordinating Special Needs Trusts and ABLE accounts, and long-term care planning. With offices in Glastonbury and Wilton, CT, Tom serves clients across Connecticut and throughout the U.S. Connect with Tom.
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