FUNDAMENTAL REPORT

Most importantly, inflation data continues to come in above expectations, while the industrial side of the economy remains on a road to recovery.

Overall, the housing sector was mixed in March, however, looking forward the signal of consumer resilience and strong demand for housing remains even though the narrative around interest rates has dramatically shifted in the hawkish direction.

Housing data came in softer this week while industrial/manufacturing data show a continued recovery. A stable labor market and a strong consumer continued to push back the markets expectations for when the first cut will occur.

The first two April Fed Manufacturing Surveys, Empire (NY) and Philadelphia, are providing a continued signal of recovery in the manufacturing sector.

Domestic production and elevated import levels point to the market as being amply supplied. This is confirmed in the market by the fact that domestic pricing has lacked the momentum to achieve the last “announced price” of $900. The Domestic – Global HRC price differential contracted for the first time after expanding for several weeks, mainly due to the domestic spot price decreasing, while the global average continued to steadily decline. For imports, preliminary data for arrivals in March and April are indicating a continued trend higher for imports, both pointing to levels not seen in nearly two years. Meanwhile, domestic production slightly retreated after last weeks surge.

Industrial production increased in line with expectations while the manufacturing subindex beat them. The trend is encouraging, especially given the ISM Manufacturing PMI finally pushing into expansion territory, joining the S&P Global Manufacturing PMI with its 3-month expansionary trend. However, the important question from here is how much of the increased activity was based on last years expectations for rate cuts as early as March.