Page 4 - NTDA Market Outlook Q1 2024

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Economic Overview

Mixed Messages, Chances of a Recession, Inflation Trends, Commodity

Prices…Continued from Page 3
In its monthly oil market report, the International Energy Agency (IEA)
highlighted a surge in oil inventories "on water" due to the increased
journeys tankers are having to make to avoid the Red Sea, while
estimating that onshore oil stocks globally were at their lowest since
at least 2016.

The IEA also slashed its estimate of average 2024 oil supply by 930,000
b/d to 102.86 million b/d following the extension of OPEC+ voluntary
output cuts announced March 3, as well as cold weather that disrupted
Canadian production early in the year.
"Preliminary data for February show oil on water rose by an exceptionally
strong 84.7 million barrels. By contrast, on-land stocks fell for a seventh
“As per capita income rises so does the demand for services, the consecutive month. Global crude oil inventories could remain below
wealthier one is the more one will spend the majority of disposable average levels in the near term after OPEC+ announced it will extend
income on having people do things for them and therefore prices go additional voluntary cuts through the second quarter," the IEA reported.
up with demand. As machines and technology take on more of what
workers used to do, the skills in demand revolve around these machines The IEA's upward revision to this year's demand growth estimate still
and the cost of that labor goes up. The bottom line from all this is that leaves it less bullish than OPEC, which in its own monthly oil market
service sector inflation is not going down anytime soon,” said Chris report on March 12 maintained that demand would grow by 2.2 million
Kuel, PhD, Managing Partners and Co-Founder of Armada Corporate b/d this year, falling to 1.8 million b/d in 2025. The IEA puts more
Intelligence. emphasis on the role of electric vehicle adoption in stemming demand
compared with OPEC.
Production and Sales
The U.S. ISM Manufacturing PMI failed to break into expansion territory, Analysts at S&P Global Commodity Insights have forecast oil demand
falling by 1.3 points in February to 47.8. December U.S. Retail and Food to grow by 1.7 million b/d in 2024 followed by 1.08 million b/d in 2025.
Services Sales contracted by 0.8% month over month (MoM), while the
YoY US Producer Price Index increased by 0.9%. Oil prices have shown steady increases as the crisis for Red Sea shipping
has intensified in recent months. The Platts Dated Brent benchmark was
Industrial production edged up 0.1% in February after declining 0.5% assessed at $84.27/b on March 13, up from $75.70/b on Jan. 2.
in January. In February, the output of manufacturing rose 0.8% and the
index for mining climbed 2.2%. Both gains partly reflected recoveries Cryptocurrencies
from weather-related declines in January. The index for utilities fell 7.5% The price of Bitcoin is up 46.9% through the first two months of the year
in February because of warmer-than-typical temperatures. At 102.3% thanks to a 45.9% surge in February alone. Ethereum is 44.2% higher in
of its 2017 average, total industrial production in February was 0.2% 2024, logging all that gain in February. Since the end of 2022, Bitcoin
below its year-earlier level. Capacity utilization for the industrial sector has jumped 275.9% and Ethereum has risen 181.4%.
remained at 78.3% in February, a rate that is 1.3 percentage points
below its long-run (1972–2023) average. Fixed Income Performance: Insights into Bond ETFs
and Treasury Yields
Housing Treasury yields rose across the board even as equities rallied.
MoM U.S. New single-family home sales increased 1.5% in January, Intermediate duration instruments posted the largest increases; the
and MoM U.S. Existing Home Sales increased by 3.1% to 4.00M in 2-year, 3-year, and 5-year all increased by 35 basis points or more.
January. The median sales price of existing homes fell 0.6% to $379,100
in January, a seventh straight monthly decline putting it 7.6% below Bond ETFs largely mimicked their January performances in February.
its all-time high set in June 2023. Mortgage rates increased slightly in The short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and iShares
February; the 15-year Mortgage Rate rose to 5.94% as of February 29th, Boxx High Yield Corporate Bond (HYG) both inched higher. In long-term
and the 30-year ended the month at 6.94%. bonds, the iShares 20+ Year Treasury Bond ETF (TLT) fell 2.3% for the
second straight month.
Commodities
The price of Gold went largely unchanged in January to end the month Equities, Inflation, and Milestones
at $2,048.10 per ounce. Equities rallied across the board as the NASDAQ led the way with a 6.2%
gain. Both the Russell 2000 and Russell 1000 posted gains of around
Crude oil prices continued higher in February. (Brent crude was listed at 5.5%, and the S&P 500 advanced 5.3%. The Dow Jones Industrial
$85.85 USD as of March 22, 2024.) Higher oil prices led the average price Average was the relative laggard but still rose 2.5%. All 11 sectors
of gas to increase 13 cents per gallon in February, closing the month at advanced higher in February. Consumer Discretionary led the way
$3.37 per gallon. with a 7.9% gain, followed by Industrials at 7.2% and Materials which
charged 6.5% higher.