Jobless Claims

With the release of the latest CPI and PPI data, inflation has increased month-to-month for the first time since March, marking the first rise in over seven months. The Federal Reserve has reiterated its goal of reducing inflation to a 2% target within a year. While this development doesn’t necessarily indicate an imminent interest rate hike, it suggests that current rates may remain unchanged for an extended period. Earlier optimism about a potential rate cut by the end of the year has significantly diminished in light of recent inflation figures and economic data. However, Retail Sales data presents a more positive outlook, showing continued economic growth ahead of the holiday shopping season.

Consumer Price Index

The consumer price index climbed 0.2% for the fourth month in a row, the government said Wednesday, matching the Wall Street forecast. The yearly rate of inflation crept up to 2.6% from 2.4%, marking the first upturn in seven months.

Producer Price Index

The PPI data met expectations overall but revealed that U.S. wholesale prices rose slightly faster in October. This suggests the Federal Reserve’s efforts to bring inflation back to low pre-pandemic levels may take longer than anticipated. Federal Reserve officials have described the recent uptick in inflation as a ‘bump,’ which could hinder the central bank from reducing high interest rates as quickly as Wall Street had hoped just a few months ago.

Retail Sales

Sales at retailers rose solidly in October and suggested the economy still has plenty of momentum heading into the holiday shopping season. Sales increased 0.4% last month, the government said Friday, and receipts in September were twice as strong as previously reported.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.01% with the current rate at 5.99%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.78%

MND Rate Index

• 30-Yr FHA rates saw a 0.09% increase for this week. Current rates at 6.39%
• 30-Yr VA rates saw a 0.07% increase for this week. Current rates at 6.39%

Jobless Claims

Initial Claims were reported to be 217,000 compared to the expected claims of 220,000. The prior week landed at 221,000.

What’s Ahead

Preliminary S&P Global US Manufacturing PMI will be early on the release schedule marking the first large end-of-the-year preliminary report. Following that immediately is the University of Michigan Consumer Sentiment Report.

Big inflation reports for the coming week with both CPI and PPI on the schedule. We should expect the data to remain within expectations given the latest reports from both the PCE Index and GDP estimates. The Federal Reserve has still remained hawkish and the last rate decision the expectation is the current rates should maintain. However with the inflation being very close to the Federal Reserve’s target inflation rate and the expected “soft landing” on the horizon. The outlook is optimistic for another round of rate cuts in future.

Federal Reserve Rate Decision

In the face of slowing inflation and strong consumer spending, the Federal Reserve announced that it will keep the interest rate steady, holding the benchmark borrowing rate to a range of 5.2%5 to 5.5%.

Consumer Credit

The numbers: The amount of borrowing by U.S. consumers in September rose a scant 1.4%, but the increase was tied mostly to student loans as Americans scale back on the use of credit cards. Consumer credit increased by $6.0 billion in September, Federal Reserve data showed. Economists had expected a $13 billion increase, according to a Wall Street Journal forecast.

Primary Mortgage Market Survey Index

?15-Yr FRM rates seeing a week-to-week change of 0.01% with the current rate at 6.00%.
?30-Yr FRM rates seeing a week-to-week change of 0.07% with the current rate at 6.79%

MND Rate Index

?30-Yr FHA rates week to week seeing a -0.32% change for this week. Current rates at 6.30%
?30-Yr VA  rates week to week seeing a -0.32% change for this week. Current rates at 6.32%

Jobless Claims

Initial Claims were reported to be 221,000 compared to the expected claims of 220,000. The prior week was 218,000.

What’s Ahead

Consumer Price Index and Producer Price Index inflation ahead. There are no other influential reports on the schedule.

This week, the Federal Reserve’s preferred inflation data was released, and the results met expectations. This, along with recent GDP estimates, employment reports, and personal income/spending figures, paints a stable economic picture. It suggests that we may be on track for the Federal Reserve’s next round of rate cuts. The Federal Reserve has consistently stated its 2% inflation target and current figures show inflation at 2.1%. This indicates that a ‘soft landing’ for the economy could be within reach.

PCI Index

Prices in the U.S. rose modestly in September, but not enough to suggest inflation is rekindling or to prevent the Federal Reserve from cutting interest rates. The Fed’s preferred PCE index moved up 0.2% last month, the government said Thursday. That matched the forecast of economists polled by The Wall Street Journal.

The increase in inflation in the past 12 months slowed to 2.1% from 2.3%, leaving it just a hair above the Fed’s 2% target.

Consumer Spending

Consumer spending and incomes both rose in September, signaling continued strength in the primary driver of the U.S. economy. Household spending increased by a solid 0.5% for the month, surpassing the 0.4% rise economists had anticipated in a Wall Street Journal poll. Incomes also grew by 0.3% in September. Overall, consumer spending surged by 3.7% in the third quarter, marking the largest increase in a year and a half.

GDP (Estimates)

The U.S. grew at a brisk 2.8% annual pace in the third quarter, powered by another sharp increase in consumer spending that appears primed to extend a four-year-old economic expansion into next year.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.28% with the current rate at 5.99%
• 30-Yr FRM rates saw an increase of 0.18% with the current rate at 6.72%

MND Rate Index

• 30-Yr FHA rates saw a 0.26% increase for this week. Current rates at 6.62%
• 30-Yr VA rates saw a 0.26% increase for this week. Current rates at 6.64%
  

Jobless Claims

Initial Claims were reported to be 216,000 compared to the expected claims of 228,000. The prior week landed at 227,000.

What’s Ahead

Next week, the Federal Reserve is set to announce another rate decision, followed by several other important reports. These include final manufacturing figures from S&P Global PMI data, the University of Michigan Consumer Sentiment report, and Consumer Credit reports.