December 12, 2022 – Economic News

• December 12, 2022
• realestatelife
• Announcements, Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

Three Things: These are the three areas that have the greatest ability to impact your backend pricing this week. 1) The Talking Fed, 2) Central Bank Palooza and 3) Inflation Nation.

1) The Talking Fed: On Wednesday we get the Fed’s latest Interest Rate Decision and Policy statement. The bond market has a 50BPS rate hike priced in. However, there still can be a lot of volatility even if the Fed does hike by 50BPS. This volatility can come from one of three areas (or even from all three areas at the same time). These three areas are: The change in the policy statement language compared to the prior statement, The path of rates and inflation in their Economic Projections (dot plot chart) and the live presser with Fed Chair Powell.

2) Central Bank Palooza: Our own Fed is not the only game in town this week as we get very key Interest Rate hikes out of the European Central Bank and the Bank of England.

3) Inflation Nation: On Tuesday (the day before the Fed release) we will get a very important reading on inflation with the Consumer Price Index.

Treasury Dump: The following is this week’s auction schedule:

12/12 3 year and 10 year note auctions.

12/13 30 year bond auction.

It is FOMC week, along with three treasury auctions, CPI and Nov retail sales. Markets began focusing the Fed two weeks ago as usual, opinions and forecasts cover the gamut about what the Fed is thinking. It hasn’t been difficult to find an opinion that matches what you think. A lot hangs on the CPI after last week’s PPI data was hotter than was expected. No debate now that inflation is slowing, the debate is will the Fed tolerate inflation at 5-6%, the estimate for core CPI yr./yr. 6.1%. It’s running at about three times its pre-pandemic pace. Excluding food and energy, the CPI is seen rising 0.3% for a second month, and 6.1% from a year ago. Janet Yellen commented, inflation will be much lower next year, but as usual the caveat, that there are no unanticipated shocks to the economy.