The following week of CPI and PPI reports are typically lighter, with this week showing the same trend. There are a number of interesting interim reports that are worth noting however, including the Federal Reserve’s Beige Book which indicates the labor market has been cooling across most of the country. Following up is the Consumer Sentiment Reports, which is an excellent indicator for how the average consumer feels about their buying power, reflecting on the current economic conditions. Slower inflation, cheaper gas and a healthy economy have boosted optimism. Lastly, retail sales reports showing activity in December.

Consumer Sentiment Report

The numbers: Consumer sentiment jumped in January to the highest level since the summer of 2021, reflecting fresh optimism about the economy as inflation slows and incomes rise.
The preliminary reading of the sentiment survey shot up to 78.8 from 69.7 in December, the University of Michigan said Friday. Two straight strong increases pushed the index to its highest level since July 2021.

Retail Sales

The numbers: Sales at retailers jumped 0.6% in December to cap off a fairly robust holiday-shopping season and underscore the resilience of a still-growing U.S. economy.
Economists polled by The Wall Street Journal had forecast a 0.4% increase.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.11% with the current rate at 5.76% 
• 30-Yr FRM rates saw a decrease by -0.06% with the current rate at 6.60%

MND Rate Index

• 30-Yr FHA rates seeing a 0.15% increase for this week. Current rates at 6.15% 
• 30-Yr VA rates seeing a 0.16% increase for this week. Current rates at 6.17%

Jobless Claims

Initial Claims declined to 187,000 compared to the expected claims of 208,000. The prior week’s count was 203,000.

What’s Ahead

Next week boasts a number of larger employment rates which come at a quarterly pace. There is also the very large Fed Rate Decision for the first quarter which strongly determines how most lending partners and markets as a whole will view things going forward. There is a lot of optimism for rate cuts this year.

With the release of the CPI and PPI we received a clearer picture of what’s ahead. With the inflation numbers for CPI (Consumer Price Index) arriving a bit warmer than expected, there was some speculation that it could cause some hesitation from the Federal Reserve on reducing rates for this year.

We also were able to see the Year-over-Year CPI inflation rates with those as well coming in at slightly higher than expected. The projected outlook for the first quarter is likely that the Federal Reserve will hold its position and continue with maintaining interest rates as they have.

Although lending rates have drastically come down, much of it will depend on where the Federal Reserve moves this quarter or the next.

Consumer Price Index

Consumer prices rose somewhat faster at the end of 2023 and interrupted a slowdown in inflation, but the recent evidence still points to a further deceleration in the months ahead. The consumer price index rose 0.3% in December to mark the biggest gain in three months.

The rate of inflation over the past year also moved up to 3.4% from 3.1% in the prior month.

Producer Price Index

U.S. wholesale prices fell in December for the third month in a row, pointing to decelerating inflation in the months ahead.

The wholesale report might keep those hopes alive, especially since a weak PPI often portends a mild reading in the PCE index. That’s the Fed’s preferred measure of inflation.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.02% with the current rate at 5.87%
• 30-Yr FRM rates saw an increase by 0.04% with the current rate at 6.66%

MND Rate Index

• 30-Yr FHA rates saw a -0.16% decrease for this week. Current rates at 6.00%
• 30-Yr VA rates saw a -0.15% decrease for this week. Current rates at 6.01%

Jobless Claims

Initial Claims were reported to be 202,000 compared to the expected claims of 210,000. The prior week was 202,000.

What’s Ahead

After the FOMC minutes for this week, next week should be a light release week with one major report being the Consumer Price Index and Producer Price Index which will show the inflation rates over December.

With the first FOMC minutes of the year, it sets the tone of the potential moves the Federal Reserve will make, with them remaining firm in their current stance of not employing any rate cuts, however given the more recent end of year reports, there is a likelihood that rate cuts will start this year. The last change in rates was in July of last year. The second most important report also being the final PMI (Manufacturing) numbers, which has largely met expectations without any irregularities.

S&P Global US Manufacturing PMI

Manufacturing PMI was revised lower to 47.9 in December 2023 from a preliminary of 48.2, and compared to 49.4 in November, pointing to a bigger deterioration in manufacturing conditions.

FOMC Minutes

According to the minutes, several officials said that the Fed might have to hold its benchmark rate steady “for longer than they currently anticipated,” while a number of officials pushed for some easing.

The dovish officials “highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained, and pointed to the downside risks to the economy that would be associated with an overly restrictive stance,” according to the minutes.

Non-farm Payrolls

The unemployment rate was unchanged at 3.7% in December, the government said Friday, keeping it near a half century low.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week decrease by -0.04% with the current rate at 5.89%
• 30-Yr FRM rates seeing a week-to-week increase by 0.01% with the current rate at 6.62%

MND Rate Index

• 30-Yr FHA rates saw a 0.08% increase for this week. Current rates at 6.16%
• 30-Yr VA rates saw a 0.08% increase for this week. Current rates at 6.16%

Jobless Claims

Initial Claims were reported to be 202,000 compared to the expected claims of 220,000. The prior week was 216,000.

What’s Ahead

After the FOMC minutes for this week, next week will primarily be a light release week with one major report being the Consumer Price Index and Producer Price Index which will show the inflation rates over December.

With the New Year, the final week only featured the normal reports of Jobless Claims, S&P Shiller Home Price Index (YoY), and the Chicago Business Barometer. All of them will have limited impact compared to the GDP and the Inflation data reports that have already been released.

S&P Shiller Home Price Index (YoY)

For the ninth consecutive month, home prices in prominent U.S. metropolitan regions have surged, reaching an all-time high. This increase is attributed to an ongoing shortage of available homes for sale. In October, the S&P CoreLogic Case-Shiller 20-city house-price index, after seasonal adjustments, showed a 0.6% rise compared to the preceding month.

Chicago Business Barometer

The Chicago Business Barometer, also known as the Chicago PMI, fell 8.9 index points to 46.9 in December.

Economists polled by the Wall Street Journal had forecast a 50 reading. 

The index had jumped to 55.8 in November, the highest level in 17 months, after the end of the United Auto Workers strike.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week decrease by -0.02% with the current rate at 5.93%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.06% with the current rate at 6.61%

MND Rate Index

• 30-Yr FHA rates saw a -0.04% decrease for this week. Current rates at 6.08%
• 30-Yr VA rates saw a -0.04% decrease for this week. Current rates at 6.09%

Jobless Claims

Initial Claims were reported to be 218,000 compared to the expected claims of 215,000. The prior week was 206,000.

What’s Ahead

Next week will be a light release week with one major report being the Consumer Price Index and Producer Price Index, which will show the inflation rates over December.

The final release of the GDP figures are the last large releases of the year before moving into Q1 of 2024, with the GDP report showing the economy had shown growth — particularly in Q3 with it tapering off by the end of the year. While the growth had been strong, it still was less than expected by analysts, however the final numbers do indicate we are on a track for a soft-landing and with the potential to all-together avoid a potential recession. The only other reports of note were the Personal Spending and PCE Index Prices.

GDP 2023 (Final)
The U.S. economy expanded at a revised 4.9% annual pace in the third quarter, a surprising burst of growth that appears to have tapered off at year’s end.

Growth of gross domestic product, the official scorecard for the economy, was reduced from a previously reported 5.2% in the government’s third estimate. It was still the biggest increase in GDP in a decade, however, excluding the pandemic years of 2020-21.

Personal Income and Spending
In November, consumer spending experienced a slight increase of 0.2%, indicating a somewhat tempered growth in the U.S. economy. The trend of subdued spending was also observed in October. On a positive note, incomes saw a rise of 0.4% during the same period. This increase in income is noteworthy as it now outpaces inflation.
PCE Index

In November, the U.S. inflation rate, as measured by the Federal Reserve’s preferred PCE index, registered a decline for the first time since 2020, signaling a continued easing of price pressures. The year-over-year inflation growth also decelerated, dropping to 2.6% from the previous month’s 2.9%, marking the lowest level since February 2021.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.43% with the current rate at 5.95%.
• 30-Yr FRM rates saw a decrease by -0.28% with the current rate at 6.67%

MND Rate Index

• 30-Yr FHA rates saw a -0.02% decrease for this week. Current rates at 6.12%
• 30-Yr VA rates saw a -0.02% decrease for this week. Current rates at 6.13%

Jobless Claims
Initial Claims have decreased to 206,000 in comparison to the expected claims of 218,000. The prior week number was 203,000.

What’s Ahead
With New Year’s on the horizon, the only notable release will be the regularly scheduled Jobless Claims release.

With both CPI and PPI reports well within expectations, there is a favorable reception across the broader market spectrum that these reports are a strong sign that the Federal Reverse will begin rate cuts in 2024. A soft landing for the economy is the primary goal of the Federal Reserve, and it would seem their measures have had the intended impact with the Jobless claims seeing a recent new low and many of the primary economic signals pointing to a stable 2024.

Consumer Price Index

The numbers: The cost of living rose a scant 0.1% in November thanks to lower oil prices, but another key measure of inflation showed higher costs of other goods and services such as rent and used cars. After being unchanged in October, the U.S. Bureau of Labor Statistics reported today that over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment, which were all falling within expectations.

Producer Price Index

The numbers: U.S. wholesale prices were unchanged in November in another sign of gradually easing inflation. Cheaper gasoline gave a big assist to the benign inflation report, but prices in most major categories were also muted. Economists polled by the Wall Street Journal had forecasted a 0.1% increase in the producer price index.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week increase by 0.09% with the current rate at 6.38%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.08% with the current rate at 6.95%

MND Rate Index

• 30-Yr FHA rates seeing a -0.29% decrease for this week. Current rates at 6.14%
• 30-Yr VA rates seeing a -0.30% decrease for this week. Current rates at 6.15%

Jobless Claims

Initial Claims have decreased to 202,000 compared to the expected claims of 221,000. The prior week was 220,000.

What’s Ahead

The data release of the CPI and PPI leave next week with a much less notable schedule, with most of the important releases being the usual Jobless Claims and Personal Income Spending. Following in importance is the Consumer Confidence reports expected to be released on Wednesday.

With both CPI and PPI reports well within expectations, there is a favorable reception across the broader market spectrum that these reports are a strong sign that the Federal Reverse will begin rate cuts in 2024. A soft landing for the economy is the primary goal of the Federal Reserve, and it would seem their measures have had the intended impact with the Jobless claims seeing a recent new low and many of the primary economic signals pointing to a stable 2024.

Consumer Price Index

The numbers: The cost of living rose a scant 0.1% in November thanks to lower oil prices, but another key measure of inflation showed higher costs of other goods and services such as rent and used cars. After being unchanged in October, the U.S. Bureau of Labor Statistics reported today that over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment, which were all falling within expectations.

Producer Price Index

The numbers: U.S. wholesale prices were unchanged in November in another sign of gradually easing inflation. Cheaper gasoline gave a big assist to the benign inflation report, but prices in most major categories were also muted. Economists polled by the Wall Street Journal had forecasted a 0.1% increase in the producer price index.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week increase by 0.09% with the current rate at 6.38%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.08% with the current rate at 6.95%

MND Rate Index

• 30-Yr FHA rates seeing a -0.29% decrease for this week. Current rates at 6.14%
• 30-Yr VA rates seeing a -0.30% decrease for this week. Current rates at 6.15%

Jobless Claims

Initial Claims have decreased to 202,000 compared to the expected claims of 221,000. The prior week was 220,000.

What’s Ahead

The data release of the CPI and PPI leave next week with a much less notable schedule, with most of the important releases being the usual Jobless Claims and Personal Income Spending. Following in importance is the Consumer Confidence reports expected to be released on Wednesday.

This will be another light week before the next large releases of the CPI and PPI data. The overall unemployment numbers have been trending lower which will likely leave the Federal Reserve board in a state of suspension. They have made many assertive statements they do not intend to cut rates soon, but the signs of a soft landing for the economy are numerous, leading to much speculation about impending rate cuts. As a general indicator, lending partners have seen a near 6 week-to-week decline in lending rates. The largest data releases this week are the U.S. Unemployment Reports and Non-Farm Payroll data releases.

Non-farm Payrolls & Unemployment Rate

Total non-farm payroll employment increased by 199,000 in November, and the unemployment rate
edged down to 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in
health care and government. Employment also increased in manufacturing, reflecting the return of
workers from a strike. Employment in retail trade declined.

ISM Non-Manufacturing PMI

The numbers: An ISM barometer of business conditions at service companies such as restaurants and hotels rebounded to 52.7% in November from a five-month low of 51.8% in the prior month.

Economists polled by the Wall Street Journal had expected the index to rise to 52.4%. Numbers over 50% indicate expansion in the economy.

Primary Mortgage Market Survey Index

Last 6 weeks have seen a week-to-week decline in rates.

• 15-Yr FRM rates seeing a week-to-week decrease by -0.27% with the current rate at 6.29%
• 30-Yr FRM rates seeing a week-to-week decrease by -0.19% with the current rate at 7.03%

MND Rate Index

• 30-Yr FHA rates seeing a week-to-week decrease by -0.07% for this week. Current rates at 6.43%
• 30-Yr VA rates rates seeing a week-to-week decrease by -0.05% for this week. Current rates at 6.45%

Jobless Claims

Initial claims have increased to 220,000 compared to the expected claims of 223,000. The prior week was 219,000.

What’s Ahead

Next week is an important release schedule with the final CPI and PPI reports, released on Tuesday and Wednesday respectively. With this final release along with the final GDP release cycle, it should give the Federal Reserve the final numbers to move ahead with a plan for next year, which seems likely to include rate cuts.

The first week of December’s largest reports are the GDP estimates, which will be the second estimations of the year prior to the final release. The final GDP reports will be after the new year and are the strongest indicator for the economic state of the country. With the Federal Reserve aiming for a soft landing for the economy, it is important for the GDP and inflation statistics to be in parity with each other. The last but also very important releases for the end of the year are the Personal Income and Spending data.

GDP Estimates (First Release)

The numbers: The U.S. economy grew at an assuring 5.2% annual pace in the third quarter, faster than previously reported, but the surprisingly strong gain appears to have been a one–off occurrence.

Gross domestic product, the official scorecard for the economy, was revised upwards Wednesday from an initially reported 4.9% rate of growth. It was the biggest increase in a decade, excluding the pandemic years of 2020 and 2021.

Consumer Spending

Consumer spending rose a mild 0.2% in October in potentially another sign of a long-predicted slowdown in the U.S. economy. While spending has slowed, many inflation rates, lending rates, and other factors have been showing signs of an improving economy.

Analysts polled by the Wall Street Journal had forecasted a 0.2% increase.

Consumer spending is the main engine of the U.S. economy and outlays grew a robust 3.6% in the third quarter.

Primary Mortgage Market Survey Index

The last 4 weeks have seen a week-to-week decline in rates.

• 15-Yr FRM rates seeing a week-to-week decrease by -0.11% with the current rate at 6.56%.
• 30-Yr FRM rates seeing a week-to-week decrease by -0.07% with the current rate at 7.22%

MND Rate Index

• 30-Yr FHA rates decreased week-to-week, seeing a -0.15% decrease for this week. Current rates at 6.50%
• 30-Yr VA rates decreased week-to-week, seeing a -0.15% decrease for this week. Current rates at 6.50%
  

Jobless Claims

U.S. jobless claims drop to five-week low of 209,000.

Initial Claims have increased to 218,000 compared to the expected claims of 215,000. The prior week was 210,000.

What’s Ahead

Next week will be an important release schedule with the final CPI and PPI reports, which saddled alongside the final GDP numbers, will be the largest indicators for the robustness of the current economy and for 2023 as a whole.

There will be a very light week with the Holiday season approaching. The only notable reports to have come out for the week are the U.S. economic leading indicators, with nothing scheduled around Thanksgiving weekend. The median forecast for the leading indicators has shown that with the rest of the CPI and PPI data among other economic statistics, the economy does seem to be heading towards a soft landing as the Federal Reserve had initially targeted. The most notable changes are lending partners cutting rates with the potential for shifting economic policies and rate cuts in the future.

U.S. Leading Economic Indicators

The numbers: The leading economic index declined 0.8% in October and fell for the 19th month in a row, but the U.S. economy doesn’t appear any closer to a recession than when the losing streak began.

Primary Mortgage Market Survey Index

The last 4 weeks have seen a week-to-week decline in rates.

• 15-Yr FRM rates seeing a week-to-week decrease by -0.09% with the current rate at 6.67%.
• 30-Yr FRM rates seeing a week-to-week decrease by -0.15% with the current rate at 7.29%.

MND Rate Index

• 30-Yr FHA rates decreased week-to-week, and we’re seeing a -0.12% decrease for this week. Current rates at 6.65%.
• 30-Yr VA rates decreased week-to-week, and we’re seeing a -0.13% decrease for this week. Current rates at 6.65%
  

Jobless Claims
U.S. jobless claims drop to a five-week low of 209,000.
Initial Claims have decreased to 209,000 compared to the expected claims of 229,000. The prior week was 218,000.

What’s Ahead
With Thanksgiving in the rearview, we are also looking at many Federal Reserve chairmen speaking next week along with Q3 GDP data release reports. There is also Personal Income Spending and PCE Index which will demonstrate the strength of the economy at a personal level. Lastly, ISM manufacturing is a small but still worthwhile report to indicate production capacity for many trade aspects.