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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Three Things: These are the three areas that have the greatest ability to impact your backend pricing this week. 1) Inflation Nation, 2) Jobs, Jobs, Jobs and 3) The Talking Fed.
1) Inflation Nation: We will get the Fed’s preferred key measure of inflation (Core PCE) on Thursday. Expectations are that it will continue to a “5 handle” in the 5.0 to 5.1% range. The headline PCE is expected to remain at 6.2%
2) Jobs, Jobs, Jobs: We get a ton of job and wage related data all throughout the week with JOLTS, ADP, Initial Claims and Challenger Job Cuts. Then we get into Big Jobs Friday with Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings, U6 Underemployment and the Labor Force Participation Rate.
3) The Talking Fed: We have a pivotal week from the Fed. Last week, it is clear that market sentiment shifted to expected the Fed to move to a slower pace of rate hikes and at a smaller scale per meeting after digesting several statements from key Fed members. This week we have the Beige Book which is released exactly 2 weeks from the next FOMC meeting/decision. We will also hear from Fed Chair Powell and many other speakers prior to the media blackout period that starts on Monday leading up to their meeting.
Check the main page for Bryan’s video break down
10 yr. note began the US Day -1 bp at 3.68% after diving to 3.62% overnight, driven by increasing unrest in China over the government COVID lockdowns. MBS prices started unchanged but by 9 am ET +14 bps from Friday. Stock indexes in futures trading, the DJIA -204.
China’s unrest is increasing with larger protests, anger against China’s Covid curbs erupted in protests that risk triggering a government crackdown. The reaction is global with stock markets declining and some safe haven moves into US treasuries. While it’s unclear how Beijing will respond to the surge in discontent, the threat of rising social instability is putting traders on edge.
This week has several key data pints after last week with no economic news. Friday Nov employment data leads the news. In the meantime, tomorrow consumer confidence index, Wednesday Q3 GDP, ADP private jobs for Nov, Thursday Oct PCE inflation data, if estimates hold inflation in October less than in Sept.
Jerome Powell scheduled to speak on Wednesday, it’s a conference on the labor market but of course he will speak to the Fed’s rate increase outlook. Expect him to echo what all Fed officials have been saying for weeks, slowing of rate increases (50 bp in Dec). With inflation still way above the central bank’s 2% target he will likely remind any talk of a downshift with a warning that rates will have further to rise next year. Expectations that the Fed will slow down next month with rates peaking around 5% next year from the current range of 3.75% to 4.00%, according to pricing of contracts in futures markets. Some at the Fed still are voicing that rates may have to increase more than the current consensus. FOMC meeting Dec 13th and 14th.
