Weekly economic and financial commentary

Summary

United States: The Housing Market Closes Out a Strong Year

• The state of the housing market was the predominant theme in what was otherwise a quiet week for economic data. Mounting inflation concerns and ongoing supply chain disruptions weighed on homebuilder confidence in January, yet home construction continues to run at a robust pace. The overall shortfall of housing inventories constrained buying activity in December and pulled existing median home prices higher.
• Next week: Q4 Real GDP (Thu.), Durable Goods Orders (Thu.), Personal Income & Spending (Fri.)

International: China Growth Outperforms in Q4-2021 While U.K. Retail Sales Disappoint

• While the economy still slowed from the prior quarter, China's economy grew 8.1% in 2021, one of the fastest annual growth rates in years. Data indicate that, month-over-month, U.K. retail sales contracted 3.7%. These data are disappointing no matter how we slice them, but can be possibly explained by households doing holiday shopping early amid concerns of shortages and delivery delays.
• Next week: Eurozone PMIs (Mon.), Bank of Canada Rate (Wed.), Central Bank of Chile Rate (Wed.)

Interest Rate Watch: No Rate Hikes Yet, but Next Week's FOMC Meeting Should Set the Table

• All eyes are on the Federal Reserve next week as monetary policymakers conduct the first of the eight planned FOMC meetings for 2022. Interest rates have jumped since the FOMC last met on Dec. 15. The 10-year Treasury yield has risen 29 bps since then, while the two-year Treasury yield has seen a similar move.

Topic of the Week: A Record Gain in Holiday Sales that Most Retailers Would Like to Forget

• Holiday sales showed a record increase in 2021, but the holiday shopping season was not without its challenges. Higher prices took some joy out of last year's gain, and December's decline in sales confirmed consumers finished their holiday shopping early amid supply chain concerns.

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