Financial Report

Major inflation reports are scheduled for the coming week, including both the Consumer Price Index (CPI) and Producer Price Index (PPI). Based on recent data from the Personal Consumption Expenditures (PCE) Index and GDP estimates, the inflation data is expected to align with forecasts. The Federal Reserve has maintained a cautious (hawkish) stance, with expectations that current interest rates will stay steady following the recent rate decision. However, inflation is now nearing the Fed’s target rate, and the prospect of a ‘soft landing’ for the economy appears within reach. This optimistic outlook suggests potential rate cuts may be on the horizon.

Federal Reserve Rate Decision

In the face of slowing inflation and strong consumer spending, the Federal Reserve announced that it will keep the interest rate steady, holding the benchmark borrowing rate to a range of 5.2% to 5.5%.

Consumer Credit

By the numbers: U.S. consumer borrowing in September rose by only 1.4%, with most of the increase attributed to student loans, as Americans reduced their use of credit cards. Consumer credit rose by $6.0 billion in September, according to Federal Reserve data. Economists had forecasted a larger increase of $13 billion, based on a Wall Street Journal survey.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase of 0.01% with the current rate at 6.00%
• 30-Yr FRM rates are seeing an increase of 0.07% with the current rate at 6.79%

MND Rate Index

• 30-Yr FHA rates are seeing a decrease of -0.17% for this week. Current rates at 6.40%
• 30-Yr VA rates are seeing a decrease of -0.15% for this week. Current rates at 6.43%

Jobless Claims

Initial Claims were reported to be 221,000 compared to the expected claims of 220,000. The prior week landed at 218,000.

What’s Ahead

Consumer Price Index and Producer Price Index inflation ahead. There are no other influential reports on the schedule.

This week, the Federal Reserve’s preferred inflation data was released, and the results met expectations. This, along with recent GDP estimates, employment reports, and personal income/spending figures, paints a stable economic picture. It suggests that we may be on track for the Federal Reserve’s next round of rate cuts. The Federal Reserve has consistently stated its 2% inflation target and current figures show inflation at 2.1%. This indicates that a ‘soft landing’ for the economy could be within reach.

PCI Index

Prices in the U.S. rose modestly in September, but not enough to suggest inflation is rekindling or to prevent the Federal Reserve from cutting interest rates. The Fed’s preferred PCE index moved up 0.2% last month, the government said Thursday. That matched the forecast of economists polled by The Wall Street Journal.

The increase in inflation in the past 12 months slowed to 2.1% from 2.3%, leaving it just a hair above the Fed’s 2% target.

Consumer Spending

Consumer spending and incomes both rose in September, signaling continued strength in the primary driver of the U.S. economy. Household spending increased by a solid 0.5% for the month, surpassing the 0.4% rise economists had anticipated in a Wall Street Journal poll. Incomes also grew by 0.3% in September. Overall, consumer spending surged by 3.7% in the third quarter, marking the largest increase in a year and a half.

GDP (Estimates)

The U.S. grew at a brisk 2.8% annual pace in the third quarter, powered by another sharp increase in consumer spending that appears primed to extend a four-year-old economic expansion into next year.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.28% with the current rate at 5.99%
• 30-Yr FRM rates saw an increase of 0.18% with the current rate at 6.72%

MND Rate Index

• 30-Yr FHA rates saw a 0.26% increase for this week. Current rates at 6.62%
• 30-Yr VA rates saw a 0.26% increase for this week. Current rates at 6.64%
  

Jobless Claims

Initial Claims were reported to be 216,000 compared to the expected claims of 228,000. The prior week landed at 227,000.

What’s Ahead

Next week, the Federal Reserve is set to announce another rate decision, followed by several other important reports. These include final manufacturing figures from S&P Global PMI data, the University of Michigan Consumer Sentiment report, and Consumer Credit reports.

This week saw relatively light activity, primarily focused on discussions with the Federal Reserve Board. The only truly notable report released was the Consumer Sentiment Report, which happily reported that sentiment had risen for the month of October. Meanwhile, the Federal Reserve’s latest Beige Book survey noted a slight decline in manufacturing activity.

Consumer Sentiment (Final)

Confidence among Republicans in a potential Donald Trump victory helped drive consumer sentiment to a six-month high less than two weeks before the U.S. presidential election. The University of Michigan reported on Friday that the initial October reading of consumer sentiment rose to 70.5, up slightly from 70.1 in the previous month—marking the highest level since April.

Federal Reserve’s Beige Book

The Federal Reserve’s latest Beige Book survey of conditions across the country continued to paint a weak picture, with nine out of 12 regional district banks reporting flat or a slight decline in activity. Most districts reported declining manufacturing activity and consumers were reported to be on the hunt for bargains.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.08% with the current rate at 5.71%
• 30-Yr FRM rates saw an increase of 0.10% with the current rate at 6.54%

MND Rate Index

• 30-Yr FHA rates saw a 0.23% increase for this week. Current rates at 6.36%
• 30-Yr VA rates saw a 0.24% increase for this week. Current rates at 6.38%
  

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 245,000. The prior week landed at 242,000.

What’s Ahead

With such a light release schedule the previous week, we should be returning to a heavier release schedule next week. The most relevant and impactful reports are job releases, personal income, non-farm payrolls, S&P Manufacturing PMI final statistics, and JOLTS job change openings.