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Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Inflation Nation: The August Headline PCE increased by 0.4% on a MOM basis which is DOUBLE the increase in July but it was lower than market expectations of 0.5%. YOY, it was up 3.5% which matched expectations. Core PCE (ex food and energy) increased by 0.1% which was less than market expectations of 0.2%. YOY, it was up 3.9% which matched expectations but lower than the upwardly revised July pace of 4.3%.
Incomes and Spending: Personal Incomes were up 0.4% in August which matched estimates and was double the increase of July. Personal Spending was the same story but July was revised upward to 0.9% which pushed the national personal savings rate to its lowest level in a year.
Rosie the Riveter: The September Bell Weather Chicago PMI was in the toilet with a contractionary reading of 44.1 which is huge drop from August’s reading of 48.7.
Consumer Sentiment: The final/revised September UofM Consumer Sentiment Index came in at 68.1 versus the preliminary release of 67.7. The 5 year inflation expectations moved from 2.7% to 2.8%
Interest rates began lower this morning, mostly a technical move as we have noted. It lasted about two hours before rates turned and edged back up, at 9:30 am ET the 10 -6 bps, MBS prices +34 bps, at 3 pm the 10 at 4.56% -2 bp MBS prices +3 bps.
The PCE August inflation data this morning compared to July was higher… except for one ingredient, the year/year core that declined to 3.9% from 4.3% in July (revised higher than originally reported). Powell and the Fed probably happy but overall inflation in August increased.
University of Michigan consumer sentiment index declined from August, to 68.1 from 69.5.
Recent consumer data has slowed, the Conference Board’s measurement also has shown declines, it is showing up in the equity markets with the key indexes ending lower once again this week.
New York Fed president John Williams, a permanent member of the FOMC said that Fed may be done raising interest rates, but the central bank should keep them elevated to bring inflation back to the central bank’s 2% goal.
The UAW strike is picking up momentum with more plants about to be struck. Auto companies trying to resist the strong demands, a 30% wage increase, a four-day week but paid for five days. It is a moving target with negotiations ongoing but it is inflationary.
The day didn’t offer up much on the coming government shutdown beginning tomorrow night at mid-night. Getting a lot of ink but markets not expecting the partial shutdown will last long.
Next Week: Monday Sept. ISM manufacturing sector index, August construction spending. Tuesday August JOLTS job openings. Wednesday weekly MBA mortgage apps, Sept ADO private jobs, August factory orders, S&P Global final service sector index, Sept ISM non-manufacturing index. Thursday weekly jobless claims, August US trade deficit. Friday Sept employment data, August consumer credit data.
This Week: The 10 year note this week increased 14 bps, the 2 year note declined 6 bps. FNMA 6.0 30 year coupon declined 66 bps. The DJIA -456, NASDAQ +7, S&P -32. Crude oil this week +$46. Gold got clobbered with the dollar decline ending the week -$80.00 The US dollar suffered a major beat down this week, the dollar index dropped 42.19 from 148.37 last Friday to 106.18 today. Bitcoin increased 329.
