April 23 – Stocks remain in the green at mid-day, though off slightly from their morning highs after initially gapping higher, with Wall Street breathing a sigh of relief amid the Trump administration’s reversal in course on attempting to fire Fed Chair Powell as well as news of a potential easing of trade tensions between the U.S. and China. With that sigh of relief, the VIX traded to its lowest level since April 3rd earlier in the session at 27.11, though it has since rebounded a bit to hover near 29.4 at the time of writing. The dollar is roughly unchanged at mid-day near 99.6, representing a solid bounce back after touching fresh 3-year lows below the 98 level on Monday. Treasuries are mixed on the day, with 10-year yields down slightly as they trade near 4.37%, while 2-year yields are up slightly as they trade just above 3.83%. Crude oil is in the red, with nearby WTI falling to a one-week low around $61.70/barrel. The ags are mixed, with most of the grains in the red while the soy complex pushes higher amid the aforementioned China optimism, while the livestock sector is mostly higher as well.
U.S. private sector growth fell to its lowest level in 16 months in April, according to this morning’s flash Composite PMI from S&P Global, though the headline reading of 51.2 remained in expansionary territory. The drop in headline PMI was driven by a sharper than expected decline in Services PMI to 51.4, down from 54.4 in March and below expectations of a more moderate decline to a 52.5 reading. However, the manufacturing sector showed unexpected strength, with the Manufacturing PMI rising to 50.7 in April, up from 50.2 in March and well above market expectations of a decline to 49.4. This highlights a divide over the impact of tariffs, with forward-looking optimism from the two sectors diverging as well. While both declined in April, service sector sentiment for the year ahead fell to its lowest level since October 2022 while manufacturing sector sentiment for the year ahead fell much more modestly, though still hitting its lowest level since August 2024.
Perhaps the most noteworthy takeaway from this morning’s PMI data, however, was the re-emergence of inflationary pressures, with composite average prices charged rising at the sharpest pace in 13 months. This was especially notable on the manufacturing side, as input costs rose at their sharpest pace since August 2022 as suppliers passed on their added costs, something we’ve also seen respondents in the housing sector note. In turn, output prices in the manufacturing sector rose at their sharpest rate since November 2022. Adding to the above, the Atlanta Fed’s one-year inflation expectations rose to 2.8% in April, up from 2.5% in the month prior and well above the 2.3% seen last April. Regardless, the market appears not to be paying attention to any of this today, with relief from Trump’s reversal on attempting to fire Fed Chair Powell and optimism around a potential U.S./China trade deal instead taking focus.
Average 30-year mortgage rates ticked higher for the second consecutive week to reach 6.90% in the week ended April 18th, a two-month high. In response, total mortgage applications in the U.S. sank by 12.7% week-on-week, the sharpest weekly decline seen in just over six months. This was a combination of a 20.0% drop in refinancing applications along with a 6.6% drop in applications to purchase a new home, falling to a seven-week low.
Elsewhere in the housing market, new home sales in the U.S. surged 7.4% month-on-month to a seasonally adjusted annualized rate of 724,000 in March, blowing past expectations of 682,000 and marking a six-month high. February was revised higher as well to show 3.1% month-on-month growth, up sharply from the initial 1.8% growth reported. Regionally speaking, the sharp uptick in March sales was driven by growth in the South (+13.6%) and Midwest (+3.0%), while a moderate decline was seen in the West (-1.4%) and a sharp decline was seen in the Northeast (-22.2%). Meanwhile, the median sales price of a new home in the U.S. fell 1.9% month-on-month down to $403,600.
U.S. crude oil inventories rose by 244K barrels in the week ended April 18th, marking the fourth consecutive weekly increase to put stocks excluding the SPR at 443.1 million, their highest level thus far in 2025. However, the refined products saw much sharper than expected draws, with gasoline inventories falling 4.48 million barrels week-on-week and distillates down 2.35 million. Despite the sharp draws seen in the refined products, bearish pressure from Kazakhstan’s reluctance to cut their oil output despite OPEC+’s much lower quota is pushing the broader energy sector lower today. Kazakhstan’s Oil Minister stated today that “national interest takes priority over OPEC+’s interests when it comes to oil output level,” raising expectations that the overproduction may be here to stay, which is taken even more bearishly given softening demand expectations amid ongoing global economic uncertainty.
