December 9, 2022 – Economic News

• December 9, 2022
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• Announcements, Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

Inflation Nation: November Producer Price Index was hotter than expected with the MOM Headline reading increasing by 0.3% vs. est. of 0.1%, plus October was revised higher. YOY, it matched forecasts at 7.4% which is lower than October’s YOY upwardly revised pace of 8.1%. Core PPI (ex food and energy) was also higher than expected. MOM, it was up 0.4% vs. est. of 0.2% and October was revised upward to 0.1%. This marks 28 straight months of MOM gains!!!! YOY, it beat out forecasts (6.2% vs. est. of 6.0%) but that is lower than October’s YOY level of 6.7%

Consumer Sentiment: The preliminary December University of Michigan Consumer Sentiment Index hit 59.1 vs. est. of 53.3 (it was 56.8 in November). The 5 year inflation index remained at 3.00%

At 8:30 am ET Nov PPI data was a little stronger than the forecasts. PPI m/m was expected +0.2%, increased 0.4%; yr./yr. PPI thought to be 7.2% increased to 7.4%. Excluding food and energy m/m expectations +0.2% increased 0.4%, yr./yr. forecasts +5.9% as reported 6.2%. The initial reaction to the stronger inflation increased the 10 yr. note by 2 bps from yesterday and MBSs -11 bps. PPI has been declining from its high back in March as inflation eased from the high levels early this year.

Bloomberg ran a survey recently that disappointed, economists surveyed were more bearish than previous surveys. According to those surveyed the Fed will hold rates at their peak all through 2023. Really not new news, the survey indicated a 50 bp increase in the FF rate next Wednesday then two 25 bps increases in 2023 before halting. Contrasting views continue to flood, investors are expecting the Fed to cut the FF rate in the second half of next year. It is all about inflation, given the various wide expectations from Wall Street, investors, and traders there isn’t any real consensus about next year’s economy or interest rates. If inflation is the primary concern, it’s the Fed that will remain the focus. In the who cares column because it is too far out, the survey saw the Fed cutting rates to 4% by June 2024 and to 3.5% by the end of that year.

The IMF and World Bank are increasingly concerned about the outlook. The IMF fund manager, Kristalina Georgieva said indicators show more downgrades to world growth are likely. World Bank President David Malpass is “deeply concerned” about a global recession.