Despite rising household formations, a solid job market and record low interest rates homeownership rates in the US are at an all-time low. One factor contributing to lower home ownership rates is tighter lending standards. After being too quick to lend during the housing boom US banks have now gone to the other extreme.
Since Trump’s election the market has seen aggressive rotation into cyclical asset classes and out of bond proxies on the expectation of higher growth and higher inflation. US Treasury yields have soared along with base metals and the US dollar has broken out of its two year trading range.
With November coming to a close today we are heading into the seasonally strongest month on the calendar. Historically the S&P500 has seen a positive return during December 75% of the time, see the following chart from Strategas Research Partners:
After two years of sideways movement, equities are now outperforming bonds. Since the election stocks have marched higher while bond yields have soared allowing the stock/bond ratio to break out, see below.
The National Retail Federation surveyed 4,330 consumers on Friday and Saturday to get some preliminary data on retail spending trends over US Thanksgiving weekend. From the data the number of shoppers rose by 3 million from last year however the average spending by shopper was down 3.5% from last year, see the following chart from RBC below:
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